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Linear Projects Sales Decline

The chip company's shares fall 4% in late trading.
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Linear Technology

(LLTC)

posted year-over-year growth in its fiscal first-quarter revenue and earnings, but the chip concern disappointed investors by forecasting a sequential decline on both the top and bottom lines.

Shares of Linear were falling 4% to $31.59 in extended trading Tuesday.

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For the quarter ended Oct. 1, Linear's revenue rose 14% from a year ago to $292.1 million. Net income, calculated in accordance with generally accepted accounting principles, was $112.4 million, or 37 cents a share, up from last year's $99.2 million and 31 cents a share.

Excluding items, Linear would have earned $124.2 million, or 41 cents a share, in the latest quarter. On that basis, profits beat the estimate carried by Thomson Financial by 4 cents. Sales for the first quarter were shy of the $293.4 million consensus expectation.

"As we had forecasted, sales and profits were roughly similar to the previous quarter," CEO Lothar Maier said in a statement. "However, the overall business environment was weaker than we expected and consequently, our bookings decreased slightly. Consumer bookings grew, but not to the extent we expected as customers remain cautious going into the holiday demand period."

Linear said the current December quarter is difficult to predict. "Macroeconomic trends are reasonable and our positioning in customer programs is good," the company said. "However, visibility is low and customers are guarded in their forecasting and inventory management."

Considering the usual seasonal slowdown in nonconsumer businesses that takes place in December, Linear projected that sales and profits in the quarter will drop roughly 5% to 7% from the first quarter. Analysts, on average, are looking for growth, with Wall Street's profit target at 38 cents and its revenue estimate at $303.5 million.