Two entire industries may be on the cusp of recovery after a tough autumn. That's the rosy conclusion I drew after reading the latest earnings report from semiconductor maker Analog Devices
By now, I'm sure you're familiar with the recent weak results from broad-line semiconductor firms. Many of them, including stalwarts like Texas Instruments
Since the mobile gadget makers aren't seeing any demand for high-end handsets, the story goes, they adjust by selling more of the low-end, low-margin models that require less horsepower in their chipsets.
But Analog Devices just bucked that trend, stating that wireless handset customers have started ordering more chips. "Orders from customers and distributors began strengthening in January and have continued to be strong, which we believe is a positive sign of improving industry conditions," said CEO Jerald Fishman.
That's an important statement, because Fishman tags January as the turnaround point. Most of ADI's peers -- who all reported rather tepid results -- didn't count any January sales to the just-reported results, because their fiscal calendars all ended around New Year's Day. Analog Devices ends that quarter at the beginning of February, and got to include that strong month in these results.
We'll have to wait another two months to see whether this marketwide turnaround theory plays out the way I just described it. Texas Instruments likes to provide mid-quarter updates; expect one in just a couple of weeks. Meanwhile, National Semiconductor reports full earnings in early March. If those two events turn out OK, chances are good that everybody from Nokia to Conexant
- There are other early indicator companies in this market
- National Semiconductor, in contrast, offered gloomy guidance.
- Compare our forecast for Analog Devices with the final numbers.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like. Foolish disclosure always smells like freshly cut jasmine blossoms, with just a hint of dew-damp lavender.