Linear Tech's Q3 Earnings Down, But In-line; Shares Soar on Buyback News

Linear Technology said Q3 net income fell 11% to $98.6 million, or $0.32/share, on a 9% decline in revenue to $255m. This is in-line with analysts' average estimates of $0.32/share on sales of $254m. Its shares are up around 10% outside of normal trading on news of a $3b share repurchase, which it said it will finance with cash and a $1.7b convertible note issue. Linear CEO Lothar Maier described the quarter as "difficult" and commented: "Although inventory in the marketplace appears to be more balanced than in previous quarters, visibility continues to be low and customers remain guarded in their forecasting and inventory management. In summary, we currently expect revenue to increase 3% to 6% with operating margins up similarly.” Shares of Linear Tecnology gained 0.8% to $32.12 during normal trading yesterday, but jumped 9.3% to $35.10 in the after-hours (range: $31.91 - $35.38) on volume of 2.27m shares. In the pre-market today, Linear has traded as high as $35.69, last at $35.40, on volume of about 50,000.

Sources: Press release (i, ii), Associated Press
Commentary: Maxim, Analog Devices Enjoy Good News From Linear • The Chip Glut Is Beyond Semi-Serious • Barron's: Who Will Be the Next Motorola? • Linear Technology Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Linear Technology (LLTC). Competitors: Analog Devices (ADI), National Semiconductor (NSM), Texas Instruments (TXN). ETFs: SPDR S&P Semiconductor (XSD), Semiconductor HOLDRs (SMH), First Trust NASDAQ Clean Edge US Liquid (QCLN)

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