Analog Devices Guides In Line

The chipmaker raises fourth-quarter income.
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Weak cell-phone sales crimped

Analog Devices'

(ADI) - Get Report

revenue in its fiscal fourth quarter.

But the company's shares got a lift Tuesday after the company delivered a strong financial outlook for the current quarter, gaining 5%, or $1.68, to $34.71 in extended trading.

In keeping with its preannouncement, ADI said Tuesday that fourth-quarter revenue was $644.3 million, down 3% sequentially. ADI initially had forecast sales to be about even with the $663.7 million it generated in its third quarter, before warning the Street last month that inventory issues among cell-phone handset customers would result in a sales shortfall.

The Norwood, Mass., chipmaker earned $138.4 million, or 39 cents a share, nearly double the $68.3 million net income, or 18 cents a share, in the year-ago period.

Excluding stock-option expenses, restructuring charges and a $26.1 million tax benefit, ADI said it earned $139.4 million, or 39 cents a share.

Analysts polled by Thomson Financial were looking for 40 cents a share on sales of $646.1 million.

The company said revenue from consumer customers grew 13% sequentially, thanks to sales of digital cameras, home-entertainment systems and video-game consoles that use ADI chips.

Communications customer revenue dropped 18% sequentially, primarily as a result of lower revenue from wireless handset customers, ADI said. Sales of digital-signal processors, which are used in cell phones, were down 21% quarter over quarter, as a result of weak handset demand and the divestiture earlier this year of the company's DSL product line.

Looking ahead, ADI projected product sales between $635 million and $670 million, and an additional $35 million in one-time revenue from a patent license fee received earlier this month.

ADI expects EPS to range between 36 cents and 42 cents. Excluding stock compensation expenses, the company pegged EPS between 38 and 44 cents.

The midpoint of ADI's projected top line and its EPS were both slightly ahead of Wall Street expectations. Analysts wee looking for 40 cents EPS on sales of $647.8 million in the current quarter.