Analog Devices
The analog chip maker saw second-quarter sales jump 41% year over year to $668 million. Gross margins improved by 390 basis point over the previous quarter and a whopping 990 basis point from the year-ago quarter. That new level of profitability more than tripled GAAP earnings to $0.55 per share. Analog converted 42% of the incoming sales into operating cash flows and spent more money on dividend payments than capital expenses. Times are good.
Like I said, nearly every part of Analog's business contributed to these improvements. The one division that failed to deliver the goods was the communications department. Chinese telecom operators put the brakes on their wireless base station installations this quarter, but current ordering patterns point to renewed Chinese networking growth in the third quarter.
That's good news not only for Analog, but also for the wireless equipment manufacturers who build systems around Analog's chips. I'm looking at you, LM Ericsson
Analog's uniformly excellent results also reinforced the indications from Silicon Laboratories
All told, this is a great time to own some manufacturing capacity of your own, like Analog does. Broadcom
Discuss the pros and cons of in-house chip manufacturing and Chinese contracts in the comments box below.