You would have to figure that the recent boom in consumer electronic spending would benefit the folks that make the guts for the PDAs, laptops, cell phones, MP3 players, and so on. Analog Devices
Most importantly, however, it projected that revenues for the first fiscal quarter would be 5% higher than those in the just-ended quarter, implying that it would sell about $585 million of goods, well higher than estimates.
Analog Devices investors were plenty cheered by the outlook, sending shares higher by more than 4% to within a hair's breadth of its 52-week high, closing at $46.59 a stub. This means that if we take the most recent quarter's earnings and annualize them, the stock is trading at a P/E exceeding 50. If the company can deliver on some substantial growth, this may not be as high as it seems, particularly as higher capacity utilization at the plants means higher operating margins on the marginal unit. I'm extremely skeptical on the "if" and "growth" part, though.
Analog Devices does not control its own destiny; as a component manufacturer, its sales are only as good as demand goes at the Nokias
We can go on the word of Analog Devices management that things are looking better. But as the Fool's Rick Munarriz pointed out in a Dueling Fools on the company in 2001, management has a history of issuing optimistic guidance and then missing. There's not much room for error here, and error's not something management can control. Fortunately this company has a canary in the coal mine. If Best Buy
