Linear Technology Corporation (LLTC): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
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.

Overview:

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 America.

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 Europe.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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