Intel (NASDAQ:INTC) isn't the only chipmaker with good news.
Linear Technologies (NASDAQ:LLTC) reported first-quarter sales growth of 23% to $174.1 million, while net income grew an impressive 29% to $69.5 million, or $0.22 per share. On top of that, the analog integrated-circuit maker added $74 million in cash to its balance sheet.
The company's eighth consecutive quarter of revenue growth was driven by improved demand for use in portable products, including cell phones and notebook computers. Sequentially, both sales and profits grew 5% from the fourth quarter. Linear said that strength in international markets should help spur similar growth in the second quarter as well.
Most notably, gross margins improved from an already impressive 74% to an even more impressive 76%. As a result, net margins gained a couple percentage points to an astonishing 40%.
With relatively modest capital expenditures and more-than-healthy margins, Linear has shown superior returns on capital compared to Maxim (NASDAQ:MXIM) in the analog world, and to both Intel and AMD (NYSE:AMD) in the digital. This high ROIC, in part, prompted former Fool analyst Brian Lund to highlight Linear Technologies in The Motley Fool Select Industry Focus 2002.
Today, Linear's strengths are reflected in its strong cash flows, declining share count, a nominal dividend, and debt-free balance sheet. Unfortunately, investors have to pay up for their share -- over 40 times this year's earnings.
Jeff Hwang can be reached at [email protected].
