Linear Technology Corp.
) reported first-quarter 2014 earnings of 47 cents, beating the
Zacks Consensus Estimate by couple of cents.
Linear reported revenues of $340.4 million, up 1.6% year over
year and 4.0% sequentially which was at the higher end of
management's guidance range of 2%-5% sequential increase. The
sequential increase was led by improved sales in the automotive
and industrial markets.
Book-to-bill ratio was greater than 1 in the quarter.
Gross margin for the quarter was 75.3%, up 10 basis points
(bps) sequentially and 30 bps from the year-ago quarter.
Operating expenses of $100.2 million were down 1.7% from the
previous quarter's $101.9 million. Operating margin of 45.9%
expanded 100 bps sequentially but was down 40 bps year over year.
As a percentage of sales,bothresearch and development (R&D)
expenses as well as selling, general and administrative
(SG&A) expenses increased.
The quarter's GAAP net income was $107.9 million or earnings
per share of 45 cents per share compared to $101.9 million or 43
cents in the previous quarter and $105.2 million or 45 cents in
the year-ago quarter. Excluding a couple of cents of debt
discount amortization but including stock-based compensation
expenses, pro forma earnings per share were 47 cents, up from 44
cents in the previous quarter and 45 cents in the September
quarter of 2012.
Linear exited the first quarter with cash, cash equivalents
and marketable securities of approximately $1.59 billion versus
$1.52 billion in the prior quarter. Account receivables were
$182.2 million, up from $145.3 million in the prior quarter.
Management repurchased 200,000 shares worth $7.9 million and
declared a cash dividend of 26 cents, which will be paid on Nov
Management provided limited guidance for the second quarter of
fiscal 2014. Revenues are expected to be flat to down 4%
Linear's first-quarter earnings were helped by strong revenues
from its automotive and industrial clients. The company's
business is well-diversified among core markets, such as
industrial, automotive and communications infrastructure.
However, its computing business has been hit by weakness in the
PC and notebook markets.
Also, management provided weak revenue guidance for the second
quarter due to a typically slow December quarter owing to the
holiday period. Also, the budgeting stalemate at the Federal
Government level could hurt results, indicating weak revenues in
the upcoming quarter.
However, Linear should benefit from its operating leverage and
lean channel inventories when demand picks up.
Linear carries a Zacks Rank #3 (Hold). Other stocks that are
worth considering include
Microchip Technology Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
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