It's always awkward to follow financial results for a company that's the target of a takeover bid. For Linear Technology (NASDAQ: LLTC), the pending acquisition by Analog Devices (NASDAQ:ADI) has most investors focusing more on the prospects of an early 2017 closing on the deal than on Linear Tech's results. Nevertheless, both companies still have to keep working hard on their own in the interim, and coming into Tuesday's fiscal first-quarter financial report, Linear Tech investors expected to see solid double-digit percentage gains in earnings and revenue. The company fell short of that goal on the top line, and earnings didn't rise quite as much as most had hoped. Let's take a closer look at Linear Technology to see what its latest quarter told investors about what could be its last year of being an independent company.

Image source: Linear Technology.

Linear Tech takes a minor hit

Linear Technology's fiscal first-quarter results didn't quite live up to the expectations that investors had for the semiconductor stock. Revenue rose 9% from year-ago levels to $373.9 million, but that was shy of the nearly 11% growth rate that most of those following the stock had expected. Net income came in at $115.1 million, up about 3% from the fiscal first quarter of 2016. After making adjustments for merger-related charges, adjusted earnings of $0.53 per share were still $0.01 per share shy of the consensus forecast among investors.

Taking a closer look at Linear Tech's financials, the company had a mix of good attributes and things that needed improvement. Gross margin expanded by about a third of a percentage point to 75.4%, but operating expenses ballooned at a much faster rate than Linear Tech's top line. As a result, operating income was actually slightly lower from year-ago levels, and it was only reduced provisions for income taxes that saved Linear Tech from a year-over-year drop in net income.

Once again, Linear Tech continued to get most of its business from the same sectors. The industrial and transportation sectors accounted for about two-thirds of Linear Tech's total bookings during the quarter, with communication-related bookings making up more than half of the remainder. From a geographical standpoint, North America, Europe, and Japan combined to bring in about three-fifths of Linear Tech's revenue, with the company's rest-of-world segment making up the remainder.

CEO Lothar Maier tried to focus on the solidity of Linear Tech's financials, noting that "revenue for our first fiscal quarter came in as we expected." Nevertheless, the company pointed to strength in transportation-related bookings in Japan and China as well as satellite communications, both of which offset weaker results in notebook computer applications and a soft European economy.

Can Linear Tech bounce back?

Linear Technology also warned about the results for its fiscal second quarter, but it said some encouraging things nevertheless. "The December quarter is typically a seasonally weak quarter due to a slower European market and in particular a weaker industrial market," Maier said, "that historically often results in a sequential quarterly revenue decline." The CEO's assessment of the situation wasn't quite that negative, pointing to positive book-to-bill ratios as likely creating flat sales sequentially, equating to a 7% to 8.5% year-over-year gain on the top line.

Nevertheless, it's hard for Linear Tech investors to get too excited or worried about the results. Back in July, the company said that Analog Devices would acquire the chipmaker for $14.8 billion, consisting of a combination of cash and stock. For every Linear Tech share they own, investors will receive $46 in cash as well as 0.2321 shares of Analog Devices. All told, the deal valued Linear Tech at roughly $60 per share, and that's close to where the stock trades now.

Linear Technology stock fell after the results were announced, dropping by about 1.5% and closely mirroring weakness in Analog Devices stock as well. In the long run, though, the only major threat to Linear Tech shares is the possibility of something getting in the way of the Analog Devices merger. Absent that, Linear Tech will focus much more on Analog Devices' performance going forward.