Earnings Preview: Linear Technology

Linear Technology (LLTC) is expected to report Q1 earnings Tuesday Oct. 14 after market close,  with a conference call scheduled for Wednesday, October 15 at 11:30 am ET.

Guidance

The consensus estimate is 45c for EPS and $310.39M for revenue, according to First Call.

Analyst Views

Cowen expects Linear to report Q1 revenue results relatively in-line with management's guidance of "flat to up 2% sequentially" or $307M to $313M on the top-line. The firm also expects EPS to be in-line with the company's 44c estimate. Turning to margins, Cowen expects gross margins to be relatively flat QoQ and operating margins to improve as a result of legal expenses returning to more normal levels after being abnormally high in the prior quarter. Cowen expects Q1 results to reflect strong demand trends for 3G handset as well as continued strength in the industrial market.

On the flip side, the firm would not be surprised to hear commentary that suggests the automotive market continues to show weakness due to tough industry conditions. Looking forward to Q2, Cowen expects the company to offer conservative guidance but near consensus expectations of 45c and $313.34M in revenues or up 1.3%, reflecting soft but stable demand trends coupled with healthy inventory levels. Cowen expects flat to low single digit bookings growth for communications, computing and industrial, with mid-single digit bookings growth for the military/space segment, reflecting normal seasonality.

Key issues for the conference call: Forward guidance, revenue growth forecasts; margin outlook; commentary on inventory levels at distributors; commentary on Commercial and Industrial demand trends which is approximately 70% of revenues; details on backlog/turns requirements; and an update on the 20M share repurchase plan announced back on July 29.