WASHINGTON (dpa-AFX) - Analog Devices Inc. (ADI) Monday reported a drop in profit for the fourth quarter as revenues declined across both analog and digital segments with customers reducing inventory. As well, both earnings and revenues for the quarter came in below Street estimates.
A continuation of weakness in the semiconductor industry and resulting drop in gross margins are expected to continue into the first quarter. The company's outlook for the first quarter is substantially weaker than what the Street currently expects.
For the fourth quarter, Analog Devices' net income dropped to $183.5 million or $0.60 per share from $225.0 million or $0.73 per share in the year-ago period. On average, 22 analysts polled by Thomson Reuters expected earnings of $0.63 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter dropped 7 percent to $716.1 million from $770.0 million in the year-ago quarter. Twenty One Street analysts had a consensus revenue estimate of $727.4 million for the quarter. Sequentially, revenue dropped 6 percent.
Jerald Fishman, president and CEO, said,' In the fourth quarter, our results declined, consistent with a general slowdown in the semiconductor industry, particularly in the industrial and communications markets.'
Consumer market revenues dropped 9 percent for the quarter from last year. Automotive revenues increased 20 percent from last year.
By product type, Analog Signal Processing revenues fell 7 percent. Another part of Analog Product category, Power management & reference revenues dropped 5 percent for the quarter. Digital Signal Processing revenues decreased 12 percent.
The company cut production levels to reduce inventories, resulting in lower gross margins. Gross margin was 64.3 percent of revenue for the quarter compared to 67.0 percent of revenue last year. Operating income for the quarter was $235 million or 32.9 of revenue compared with $286 million or 37.1 percent of revenue last year.
Providing its outlook for the first quarter, the company expects earnings in the range of $0.44 to $0.51 per share, while the Street currently expect $0.60 per share.
Inventory cutback by customers and the seasonally weak first quarter are expected to cause a sequential decline in revenues from 5 to 10 percent. Similar to its response in the fourth quarter, the company plans to bring production levels down in the first quarter and offset impact on gross margin by expense management.
The outlook represents first-quarter revenues of $644.5 million - $680.3 million. The Street currently expect revenues of $706.6 million for the first quarter.
The company declared a cash dividend of $0.25 per outstanding share of common stock, to be paid on December 21, 2011 to all shareholders of record at the close of business on December 2, 2011
ADI closed Monday's regular trading at $34.34, down $0.96 or 2.72%, on the NYSE. In the after-hours, the stock lost $0.33 or 0.96%. Over the past year, the stock traded in a range of $29.23 - $43.28.
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