Looking at Linear Technology's
Last night, Linear reported second-quarter earnings of $0.38 per diluted share on $249 million in revenue. That's bad by the company's standards -- earnings fell by $0.03 per share year over year and $0.10 per share sequentially. Sales swooned to the tune of 14% compared to the previous year and 20% relative to the previous quarter. But listen to CEO Lothar Maier's lament and try to spot the unusual detail.
"Pre-tax profits are likely to fall into the low to mid thirties range as a percentage of net sales and around 40% of net sales on a non-GAAP basis," Maier said.
All things considered, not bad. Semiconductor manufacturers are not supposed to have pre-tax earnings in the 30% to 40% range. Industry leaders like Intel
Linear is sitting pretty with the fattest profit margins in a notoriously cutthroat market thanks to its high-profit, first-to-the-market, proprietary products such as Apple's
Everything isn't smooth sailing, though, even for this sector-leading cash creator. Third-quarter sales are expected to drop another 15% to 20% from the second quarter, whereas Linear is used to about 6% sequential sales growth between these two periods. And even that gloomy outlook assumes that order volumes in February and March pick up a bit from current rates.
But the company appears to be weathering the recession, buying back $200 million of its $1.7 billion in senior debt notes last quarter and raising its quarterly dividend by a penny to $0.22 per share. Hard times will separate the wheat from the chaff, and Linear is practically bread already.
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