Ahead Of The Bell: ADI Shares Jump

NEW YORK (AP) — Shares of chip designer Analog Devices Inc. jumped in premarket trading Wednesday after the company's fiscal second-quarter results and outlook beat Wall Street forecasts.

The Norwood, Mass.-based company reported after the markets closed Tuesday its second-quarter profit dropped 61 percent, reflecting a slowdown in chip demand brought on by the recession.

But Analog Devices still managed an adjusted profit of 21 cents per share, with costs coming in lower than expected. On average, analysts were looking for 9 cents.

Revenue of $474.7 million beat the average projection of $427.2 million.

Deutsche Bank analyst Ross Seymore upgraded shares to "Buy" from "Hold." In a note to investors Tuesday, he said the company's ability to improve margins "is significantly underestimated and should yield greater earnings power than in its past cycles."

For the fiscal third quarter, the company said it expects adjusted earnings of 17 cents to 19 cents per share with revenue flat versus the previous quarter.

Analysts were looking for 11 cents per share on sales of $441.8 million.

Shares jumped $2.52, or 12 percent, to $23.10 in premarket trading Wednesday.