Source: Linear Technology.

Last year wasn't the best one for semiconductor company Linear Technology (NASDAQ:LLTC), whose shares climbed less than 3% for the year. Given its focus on high-end analog integrated circuits, Linear Tech doesn't get as much exposure as many larger semiconductor rivals. But with a solid moat against competitors and a firm grip on a lucrative niche in the technology industry, Linear Tech has produced consistent long-term gains for shareholders. In Tuesday afternoon's fiscal second-quarter financial report, Linear Tech reminded investors why the company is as reliable as it has been, releasing encouraging results even during what's traditionally a down quarter for the tech stock. Let's take a closer look at Linear Technology's latest results with an eye toward what's to come for the stock in 2015.

Linear tops on earnings, falls short on revenue 

At the highest level, Linear Technology's headline results for the quarter were mixed. Overall revenue climbed 5.4% from the year-ago quarter to $352.6 million, but that figure was slightly below what investors had expected to see, and Linear Tech also noted that it represented a significant sequential drop of 5% from the fiscal first quarter. Earnings, though, were more favorable, with net income of $123.6 million representing an 18% jump from fiscal 2014's second quarter and coming out to $0.51 per share. That topped estimates by a penny despite again falling short of first-quarter levels.

Source: Linear Technology.

Linear Technology wasn't surprised by the mixed results and took them in stride. As CEO Lothar Maier noted, "We had expected this sequential decline as the second quarter has historically been seasonally weak for us." Moreover, conditions appeared to improve during the quarter, with Maier observing that bookings initially declined but got better as the quarter went on.

Another encouraging piece of news for shareholders was the fact that Linear Technology boosted its dividend, raising its quarterly payout by 11% to $0.30 per share. The increase represented the 23rd consecutive year that the company had given investors a higher dividend, leaving it just a couple years short of potentially becoming a Dividend Aristocrat. Maier explained the move by pointing out that "now that we no longer have debt to repay, we have increased our cash return to shareholders," and Linear Tech also expects share buybacks to play a role in returning capital to investors in the future.

Will 2015 be better for Linear Technology?

Linear Technology has a fairly optimistic view of what calendar 2015 will bring. "As is typical, we expect our major end-markets to improve during the second half of our fiscal year," said Maier, and "we are currently forecasting revenues to grow sequentially by 4% to 7% in our fiscal third quarter." In particular, Linear Tech expects the automotive and industrial markets to help drive growth in the March quarter. With current estimates looking for roughly 3% sequential growth, that implies better times ahead for the remainder of Linear Tech's fiscal 2015.

So far, Linear Technology's overall strategic vision appears to be working. Rather than trying to serve all parts of the technology market, Linear Tech looks for the areas of the market that have the greatest potential for high-margin sales. That requires the company to make constant shifts in its tactics, looking for new opportunities while accepting that older technology will eventually become commoditized and therefore a losing proposition for a business that thrives on keeping margins up. Yet that also helps Linear Tech develop interesting market opportunities, with systems for hybrid/electric vehicle battery monitoring and other automotive offerings that can take advantage of good conditions in the auto industry.

Source: Linear Technology.

Moreover, Linear Tech hasn't fallen into the trap of letting itself become too reliant on any single supply relationship. With thousands of customers, Linear Tech can deal with the loss of any client without it being catastrophic for the company. Its biggest vulnerability is a broad-based cyclical downturn that would hurt all of its customers, but for now, that hasn't happened.

Shareholders were pleased by Linear Technology's earnings beat and favorable guidance, sending shares up 4% in the first half hour after the announcement in after-hours trading. With plenty of potential in serving the growing technology market, Linear Tech has a good chance of getting back on a stronger footing this year and beyond.