Earnings Preview: Analog Devices

Analog Devices (ADI) is expected to report Q1 earnings Wednesday with a conference call scheduled for 5:00 p.m. ET.

Guidance

The consensus estimate is 40c for EPS and revenue $623.54, according to First Call. Analog Device's guidance for the quarter, excluding the divested power business, is $610M to $635M (-2% to +2% quarter-over-quarter), with EPS guidance of 38c to 42c.

Analyst Views

Deutsche Bank believes that the divestiture of its low margin business will lead to more favorable product mix in Q1 and allow gross margins to improve to slightly above 60% level. Analog Devices reports on an off-cycle versus some of the other specialty semiconductors companies, therefore giving investors a look back on January and February order intensity given recent comments from competitors suggesting a weakening of order trends within the analog sector.

American Technology expects Analog to guide April down ~5%. Discontinued business should decline significantly in Q2, while ongoing business will be +/- a few % points. Discontinued business should be neutral to EPS. For Q2, Deutsche believes that the primary challenge facing Analog Devices is reinvigorating its core Analog business and thereby improving revenues, margins and EPS.

Key conference call focus items: Comments and guidance on bookings/billings, guidance on gross and operating margins, capital expenditure trends, commentary on inventory and lead times, the outlook for end-demand, and more details on the restructuring of DSP business.

Next event: Vice President of ADI's Analog Semiconductor Division, Robert McAdam, will present at the Goldman Sachs Technology Investment Symposium on Feb.26 at 12:40 pm ET, and will be webcast live