Linear Technology is a leading OEM of analog and mixed signal
semiconductors. Fiscal first-quarter results missed the Zacks
Consensus Estimate by a penny due to a higher tax rate. Linear's
solid business model, excellent products, ability to generate
strong operating cash flows and dividend yield were the positives.
Though the steady growth and profitability of its core industrial,
communications infrastructure and automotive businesses may be
positive over the long term, the increased competition and
consequent pricing pressure remain offsetting factors. We,
therefore, have a Neutral recommendation on LLTC shares.
Milpitas, CA-based Linear Technology Corporation (LLTC) is an
original equipment manufacturer (OEM) of high-performance analog
and mixed signal chips, such as power management components, data
converters, amplifiers and comparators. Customers embed these
semiconductor devices into various electronic systems or devices.
The company serves a diverse clientele in the communications,
industrial, computing, high-end consumer, automotive and
aerospace/military end markets.
End applications for Linear's products include cell phones,
networking products, notebook computers, computer peripherals,
video/multimedia sets, industrial instrumentation, security
monitoring devices, digital cameras, MP3 players, complex medical
devices, automotive electronics, factory automation and process
control systems, as well as military and space systems.
The company uses its California and Washington facilities to
manufacture most of its semiconductor wafers, which are the raw
material from which a semiconductor chip or device is constructed.
The assembly and testing is conducted in the Far East, utilizing
both in-house and third party resources. Linear has expanded
testing and assembly capacity in Singapore and assembly operations
in Penang (Malaysia). It has also made additions to the existing
Camus and Milpitas facilities.
The marketing effort is split, both nationally and
internationally, between a direct sales force, electronics
distributors and individual sales representatives. The bulk of
orders are received through direct marketing staff and distribution
channels, which enable LLTC to reach over 15,000 OEMs around the
world. The company has four distributors in North America, five in
Europe, two in China, seven in Japan, three in Taiwan, three in
Russia, and one each in Korea, Singapore, Malaysia, Thailand, South
Africa, Philippines, Israel, Brazil, Australia and New Zealand.
Linear provides sales support through its many sales offices across
North America, Europe and Asia, as well as two independent sales
representatives, one of which is in the U.S. and one in South
In fiscal year 2014, Linear Technology had sales of $1.28
billion, of which 29% was generated domestically, 38% came from the
Asia/Pacific region (ex-Japan), 15% from Japan and 18% from
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