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 (NYSE:ADI) is no exception, having turned in earnings on Tuesday of $0.23 per share compared to $0.09 a year ago. The company -- one of the largest and most important suppliers of digital signal processors (DSPs) -- also announced it would pay a dividend of $0.04 per share.

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 (NYSE:NOK), Ericssons (NASDAQ:ERICY), Dells (NASDAQ:DELL), Sonys (NYSE:SNE) and myriad other electronic thingy manufacturers. If this Christmas fails to be spectacular, the heavy amount of inventory buildup that comes courtesy of current earnings could savage those in later months. In this case, the large multiples investors give present earnings and cash flows could cause substantial contraction.

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 (NYSE:BBY) starts saying revenues are soft, then look out -- because that's one of the big channels consumer electronics manufacturers are counting on.