Analog Devices Marginalized Again: Fool by Numbers

On Nov. 27, chip designer Analog Devices (NYSE: ADI  ) released fourth-quarter earnings for the period ended Nov. 3.

  • The margin misery continues, as every conceivable profit proportion slides southward yet again. Growing cash flows make up for some of the damage, though.
  • The company continues to use cash for share buybacks. The three-year-old repurchase plan has $665 million of authorized buybacks remaining, out of the original $3.3 billion authorization.
  • The report is full of unusual metrics that help investors examine the results from different angles. Curiously enough, some bog-standard figures are missing, including accounts payable and short-term debt.

(Figures in millions, except per-share data)

Income Statement Highlights

Q4 2007

Q4 2006

Change

Sales

$648

$610

6.4%

Net Profit

$97.9

$138

(29.3%)

EPS

$0.31

$0.39

(20.5%)

Diluted Shares

313.8

357.2

(12.1%)

Get back to basics with the income statement.

Margin Checkup

Q4 2007

Q4 2006

Change*

Gross Margin

58.4%

59.6%

(1.2)

Operating Margin

18.7%

20.2%

(1.5)

Net Margin

15.1%

22.7%

(7.6)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q4 2007

Q4 2006

Change

Cash + ST Invest.

$1,081

$2,128

(49.2%)

Accounts Rec.

$336

$306

10.0%

Inventory

$348

$363

(4.3%)

The balance sheet reflects the company's health.

Cash Flow Highlights

Q4 2007

Q4 2006

Change

Cash From Ops.

$183

$167

9.7%

Capital Expenditures

$33.2

$41.8

(20.5%)

Free Cash Flow

$150

$125

19.8%

Owner Earnings

$102

$139

(26.3%)

Free cash flow is a Fool's best friend.

Competitive Context

Market Cap

Trailing P/E Ratio

CAPS Rating

Texas Instruments (NYSE:TXN)

$44,350

18.2

****

Broadcom (NASDAQ:BRCM)

$15,070

96.5

***

Analog Devices

$10,340

21.2

***

Linear Technology (NASDAQ:LLTC)

$6,820

21.6

****

National Semiconductor (NYSE:NSM)

$6,070

21.5

****

Using the latest reported numbers from Capital IQ, a division of Standard & Poor's.

Keep your partners close and the competition in your vest pocket.

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