Maxim Joins Inventory Buildup Chorus

Updated from 5:42 p.m. EST

Maxim(MXIM) grew its first-quarter profit but said an inventory buildup hurt new bookings, a development bound to weigh on revenue in the quarter now under way.

Though the news follows a host of similar reports from the company's peers, Maxim shares still lost some ground in postclose trading, falling 64 cents, or 1.5%, to $43.57. In regular trading, the stock finished up 22 cents, or 0.5%, $44.21.

In the first quarter of fiscal 2005, the Sunnyvale, Calif.-based analog chipmaker posted net income of $144.5 million, or 42 cents a share, up from $87.4 million, or 25 cents, a year ago.

Sales totaled $435.1 million, up 40.3% from last year's level and 3.4% above the prior quarter.

Sales came in a tad light of the consensus estimate for $454 million, but earnings were in line with expectations, according to Thomson First Call estimates.

Gross margin stood at 72.4%, up from 70.2% in the prior quarter.

First-quarter net bookings fell to $377 million, sharply below the prior quarter's order level of $535 million.

Lower bookings signal that Maxim's customers are trying to work down the same nasty inventory buildup cited by virtually every other semiconductor company this earnings season.

In fiscal 2004 Maxim booked about $250 million more in orders than its customers actually consumed, the company said. As a result, executives were expecting to see bookings decline while the stockpiles are winnowed down.

"We believe that the fiscal 2004 third- and fourth-quarter booking levels reflected a desire by many customers to avoid supply-chain disruptions in a longer-lead-time environment," said CEO Jack Gifford in a statement. "Now that lead times are shortening, customers appear to be reverting to more of a 'just in time' approach to order placement."

In a post-close conference call, the company guided for net revenues and earnings in the second quarter to be "slightly above" first-quarter levels.

Analysts were expecting the company to deliver earnings of 44 cents a share on $471 million in revenue for the quarter ending in December.

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