Maybe the calls for a double-dip recession in the IT industry were a bit premature.
At $720 million, Analog's sales made an 8% sequential improvement and a 46% year-over-year gain. You will recall that Maxim Integrated Products
Last quarter's 65% gross margin was already a record for ADI, but there was still room for improvement: the third quarter's gross margin inflated to 66.7%. The trickle-down economics of the income statement then created record operating and net profit margins as well, and earnings nearly tripled from $0.22 a share a year ago to $0.65 per share today.
I think there's still more headroom in the operating model. For example, direct competitor Linear Technology
In the words of CFO Dave Zinsner: "We are running the business at a significantly higher profitability level versus prior peaks." If the company can keep up or improve upon the margin performance, this could be a great time to own Analog stock. A 3% dividend backed by strong cash flows doesn't hurt any, either. I'm rating this stock "outperform" in our CAPS system right now. Follow in my all-star footsteps and make your own mark, whether you agree or not.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. He wears size 13 sandals. Cypress Semiconductor is a Motley Fool Rule Breakers choice. Linear Technology is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.