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Integrated circuit-maker Linear Technology (NASDAQ:LLTC) has had to deal with extreme volatility in the semiconductor market, as changing patterns of demand have disrupted prevailing trends throughout the industry. Coming into Tuesday afternoon's fiscal fourth-quarter financial report, Linear Technology investors were looking for the company to find a way to sustain growth as long as possible. Yet while the circuit-maker did produce some year-over-year growth, the trend has started to flatten out, and the company's guidance for the current quarter spooked those who had hoped for more impressive growth prospects. Let's take a closer look at Linear Technology's results and what the future might hold for the company.

Is Linear Tech topping out?
Linear Technology did manage to produce some growth in its latest results. Revenue climbed 3.8% to $379.5 million, and some of those higher sales made it through to the bottom line as well, with net income climbing 2.3% to $132.7 million. Yet the rate of those gains was slower than investors had expected, and earnings of $0.54 per share were up only a penny from year-ago levels, falling short of the $0.56 per share that investors had hoped to see.

A look at the results for the full fiscal year show how things have slowed down for Linear Technology during the latter part of the year. Revenue for fiscal 2015 climbed 6.2%, with net income posting a better than 13% gain. In that light, it's clear that investors are right to worry about the general trend and the somewhat sluggish growth from the company during the fiscal fourth quarter.

Some of the challenges that Linear Technology has faced come from its commitment to spending on research and development. Despite the sluggish sales gains, Linear Tech spent almost 6.5% more on R&D during the quarter than it did in last year's fiscal fourth quarter, and in part, that held back net income from posting as big a percentage gain as the top line.

Moreover, CEO Lothar Maier explained some of the problems that Linear Tech has had to deal with. "The June quarter is typically a strong quarter for us," Maier said," though we had some concern with global macroeconomic conditions that tempered out expectations. As the quarter progressed, these conditions appeared to worsen, and bookings slowed considerably." Although the weakness was broad-based, Maier singled out the Industrial and Computer markets as being particularly difficult for Linear Tech.

Can Linear Technology recover?
Even more troubling are some of the things Linear Tech said about its future prospects. As Maier pointed out, because of  "the decline in bookings received in the June quarter, coupled with a sluggish global economic environment, we are preparing for a difficult first fiscal quarter." In particular, Linear Tech believes that revenue will fall between 7% and 12% compared to the fiscal fourth quarter of 2015, which is a far cry from the roughly 2% to 3% gain in sequential revenue that investors had expected to see. The company held out hope that the downward part of the business cycle would be a short one, but much will depend on how Linear Tech's customers react to the difficult conditions in the industry.

Despite these concerns, Linear Tech has continued its stock repurchase efforts. During the quarter, the company spent $32.2 million to purchase common stock, bringing its total return of capital to shareholders to more than $105 million. Still, Linear Tech's balance sheet remains solid, with cash of more than $195 million helping to ensure that the company will be able to maintain strategic flexibility in the future.

Linear Technology stock didn't react well after the news came out, with shares falling almost 4% in the first 45 minutes of after-market trading following the announcement. In the long run, a single quarter's earnings miss won't be important, but the comments that Linear Tech has made about its uncertainty with regard to industry conditions in the future justifies at least some caution. Long-term investors will want to keep their eyes on Linear Tech to see if it rebounds quickly from its setback.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Linear Technology. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.