) reported fourth-quarter 2013 earnings of 44 cents, surpassing
the Zacks Consensus Estimate of 42 cents.
Linear reported revenues of $327.3 million, up 4.0%
sequentially but down 0.8% year over year, in line with the
higher end of management's guidance range of 1-4% sequential
increase. The sequential increase was led by improved sales into
automotive and industrial markets.
Book-to-bill ratio was greater than 1 in the quarter.
Gross margin for the quarter was 75.2%, up 35 basis points
(bps) sequentially and down 23 bps from the comparable quarter of
the prior year.
Operating expenses of $98.9 million were up 2.0% from the
previous quarter's $97.0 million. Operating margin of 44.9%
expanded 90 bps sequentially owing to a slight decline in
research and development (R&D) as well as selling, general
and administrative (SG&A) expenses (as a percentage of
Net income for the quarter was $101.9 million or 31.2% of
sales compared to $111.0 million or 35.3% in the previous quarter
and $103.3 million or 31.3% of sales in the year-ago quarter.
Earnings, including a couple of cents of debt discount
amortization, were 44 cents, down from 48 cents in the previous
quarter and 45 cents in the June quarter of 2012.
Inventories increased 0.8% sequentially, with inventory turns
staying relatively flat at 3.7X. Days sales outstanding (DSOs)
was flat at 41. The company ended with cash and short-term
investments of $1.52 billion, up $70.2 million during the
Management repurchased 944000 shares worth $34.0 million and
declared a cash dividend of 26 cents, which will be paid on Aug
Management provided limited guidance for the first quarter of
fiscal 2014. Revenues are expected to increase 2-5%, much better
than normal seasonality. The improved revenue guidance reflects
better book-to-bill ratio.
Linear's fourth-quarter earnings were helped by a positive
mix. Lower-margin segments softened while higher-margin segments
grew strongly. 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 areas.
Another positive is the extreme caution that distributors have
shown in recent times, which indicates that distributor
inventories remain very lean. Therefore, Linear should benefit
from its operating leverage and lean channel inventories when
demand picks up.
Linear carries a Zacks Rank #3 (Hold). Other semiconductor
stocks that are worth considering include
Microchip Technology Inc.
), all carrying a Zacks Rank #2 (Buy).
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