Updated from 4:26 p.m. EST

Analog Devices

(ADI) - Get Report

reported fourth-quarter results Tuesday in line with its weaker outlook released last month, but gave first-quarter guidance short of analysts' estimates.

The Norwood, Mass.-based analog semiconductor company said net income rose to $132.3 million, or 34 cents a share, from $88 million, or 23 cents a share, a year earlier.

Revenue rose 13% from a year ago to $632.1 million but fell 12% from the prior quarter.

Wall Street analysts expected ADI to earn 33 cents a share on $637 million in revenue in the fourth quarter, according to Thomson First Call.

Gross margins edged up 370 basis points from last year to 59.5% in the fourth quarter, which ended Oct. 30.

In October, ADI

jumped on the bandwagon of semiconductor companies warning of sales failing to pick up at the end of the quarter. At that time, Analog said it sales ranging from $630 million to $640 million for the quarter ending Oct. 30, down 10% to 12% from the prior quarter vs. previous guidance in August calling for a flat quarter.

ADI also lowered earnings guidance to 33 cents to 35 cents a share, from flat sequentially at 43 cents a share. At that time, ADI attributed the lower-than-expected results to weakness in Southeast Asia and Japan as well as a handset industry build-up and credit squeeze in China.

ADI said Tuesday that about one-third of the revenue decline in the fourth quarter was attributed to China, one-third to Japan and one-third to the rest of the world. The wireless communications and automatic test equipment end markets were the weakest markets in the fourth quarter.

Looking ahead, Analog Devices expects first-quarter revenue to range from $575 million and $600 million, gross margins to remain at 58% to 59% and earnings to range from 28 cents to 31 cents a share. Those numbers are far short of analyst estimates, which call for first-quarter revenue of $645 million and earnings of 34 cents a share.

"There remain many mixed signals surrounding the outlook for the first quarter of fiscal year 2005," CEO Jerald Fishman said in a statement. "Order volatility has abated, cancellations have returned to more normal levels, and customers tell us their end demand continues to grow."

But customers continue to reduce their inventory and consequently the company's backlog entering the first quarter is low, Fishman added. He said he expects ADI revenue growth to resume in the fiscal second quarter.

"Much of this inventory build-up that has caused recent volatility is likely to be absorbed by the end of the first quarter," he said. The company expects the first quarter to represent a cyclical low of shipments to automatic test equipment markets, while market share in China should be a positive factor for the second quarter and beyond.

Shares of Analog Devices closed down 39 cents, or 1.0%, to $39.01. In after-hours trading, the company recently changed hands at $39.02.