Analog Devices Updates Outlook for Second Quarter of Fiscal 2001

Apr 12, 2001, 01:00 ET from Analog Devices

    NORWOOD, Mass., April 12 /PRNewswire/ -- Analog Devices (NYSE:   ADI) today
 announced that it has updated its outlook for the second quarter of fiscal
 2001, which ends May 5.  The company now expects that the second quarter's
 revenues will total approximately $600 to $620 million, up 3 to 7% from the
 same period last year and down 20 to 22% sequentially.  At this revenue level,
 the second quarter's operating margin is expected to be approximately 25% of
 sales and pro forma earnings per share are expected to be $0.31 to $0.33.
     "Our revised second-quarter revenue target," said Jerry Fishman, President
 and CEO, "is due to the continuing slow down in orders compared to last year's
 accelerated pace, coupled with the significant order cancellations and backlog
 adjustments that have continued throughout the quarter.  Most of these
 reductions are the result of substantial decreases in shipments to large North
 American telecommunications OEMs, wireless infrastructure OEMs and ATE
 suppliers in the U.S. and Japan.  Our distribution sell-through, which
 represents tens of thousands of end customers worldwide, is expected to be
 approximately flat to last quarter, following a sequential decline in the
 first quarter.
     "As we indicated last quarter, we have continued working toward preserving
 our financial performance during this period of reduced expectations and an
 uncertain outlook.  We currently believe that gross margin as a percentage of
 sales will be flat to down slightly from the first quarter as a result of a
 more favorable product mix and our strategy of outsourcing the manufacture of
 our most volatile product families.  Second-quarter operating expense dollars
 will likely decline a few percent compared to the first quarter.  We expect
 quarter-end inventories will be flat or down slightly compared to the first
 quarter and that operating cash flow for the quarter will total approximately
 $125 million, raising our cash balance to nearly $2.5 billion."
     Mr. Fishman continued, "We believe our shipments to OEM customers are
 running below their consumption levels, which is bringing down their
 inventories.  We are also encouraged by the trend in our distributors'
 shipments to their customers, which appear to have stabilized following the
 decline we saw last quarter.  Nevertheless, we remain cautious, given the
 still high, albeit declining, order cancellations rates, continued backlog
 churning and uncertainties about end-market demand for the balance of the
 year.  We currently believe that third-quarter revenues could be approximately
 5% below those for the second quarter.  We also believe that the third quarter
 could be our trough quarter, with revenues showing modest sequential growth in
 the fourth quarter.
     "We continue to believe," concluded Mr. Fishman, "that high-performance
 analog and DSP are the right technologies for this decade, and that with our
 strong product and market positions, we will again this year outperform the
 overall semiconductor market, despite the unprecedented volatility in the
 supply chain and end markets."
     Analog Devices will host a conference call Thursday, April 12 at 9:00 a.m.
 Eastern time to answer questions regarding its updated outlook.  Investors who
 wish to listen to the call can dial 712-271-0577 10 to 20 minutes before the
 call begins and provide the password "ADI" when asked.  The call will also be
 carried as a webcast, which can be accessed at www.analog.com by clicking on
 "Investor Relations" and then "Financial Releases."  A replay of the
 conference call will be available for one week either by dialing 402-530-7753
 or by going to www.analog.com and clicking on "Investor Relations" and then
 "Audio Archives."
     Analog Devices plans to announce results for the second quarter of fiscal
 2001 on May 17 following market close, with a conference call to follow at
 4:30 p.m. Eastern time that same day.
 
     Safe harbor statement under the Private Securities Litigation Reform Act
 of 1995:  This release contains forward-looking statements, including our
 statements regarding revenues and operating margins, that are based on our
 current expectations, beliefs, assumptions, estimates, forecasts and
 projections about the industry and markets in which Analog Devices operates.
 The statements contained in this release are not guarantees of future
 performance and involve certain risks, uncertainties and assumptions which are
 difficult to predict.  Therefore, actual outcomes and results may differ
 materially from what is expressed in such forward-looking statements.
 Important factors which may affect future operating results include the
 effects of adverse changes in overall economic conditions, the timing and
 duration of market up turns and downturns, the growth of the markets Analog
 Devices serves, demand for semiconductors generally and for the Company's
 products in particular, the risk that our backlog could decline significantly,
 the ability of the Company to hire engineers and other qualified employees
 needed to meet the expected demands of our largest customers, reversals or
 slowdowns in the markets or customers served by the Company's products and the
 adverse effects of building inventories to meet planned growth that fails to
 materialize, the occurrence and frequency of inventory and lead-time reduction
 cycles, raw material availability, availability of both internal and external
 manufacturing capacity, technological and product development risks,
 competitors' actions and technological innovations and other risk factors
 described in the Company's most recent annual report on Form 10-K.
     With revenues of $772 million for the first quarter of fiscal 2001, Analog
 Devices is a leading manufacturer of precision high-performance integrated
 circuits used in analog and digital signal processing applications.  The
 company is headquartered in Norwood, Massachusetts and employs approximately
 9,800 people worldwide.  It has manufacturing facilities in Massachusetts,
 California, North Carolina, Ireland, the Philippines, Taiwan and the
 United Kingdom.  Analog Devices' stock is listed on the New York Stock
 Exchange and the company is included in the S&P 500 Index.
 
     CONTACT:  James O. Fishbeck, Director of Corporate Communications of
               Analog Devices, 781-461-3282, or james.fishbeck@analog.com.
 
 

SOURCE Analog Devices
    NORWOOD, Mass., April 12 /PRNewswire/ -- Analog Devices (NYSE:   ADI) today
 announced that it has updated its outlook for the second quarter of fiscal
 2001, which ends May 5.  The company now expects that the second quarter's
 revenues will total approximately $600 to $620 million, up 3 to 7% from the
 same period last year and down 20 to 22% sequentially.  At this revenue level,
 the second quarter's operating margin is expected to be approximately 25% of
 sales and pro forma earnings per share are expected to be $0.31 to $0.33.
     "Our revised second-quarter revenue target," said Jerry Fishman, President
 and CEO, "is due to the continuing slow down in orders compared to last year's
 accelerated pace, coupled with the significant order cancellations and backlog
 adjustments that have continued throughout the quarter.  Most of these
 reductions are the result of substantial decreases in shipments to large North
 American telecommunications OEMs, wireless infrastructure OEMs and ATE
 suppliers in the U.S. and Japan.  Our distribution sell-through, which
 represents tens of thousands of end customers worldwide, is expected to be
 approximately flat to last quarter, following a sequential decline in the
 first quarter.
     "As we indicated last quarter, we have continued working toward preserving
 our financial performance during this period of reduced expectations and an
 uncertain outlook.  We currently believe that gross margin as a percentage of
 sales will be flat to down slightly from the first quarter as a result of a
 more favorable product mix and our strategy of outsourcing the manufacture of
 our most volatile product families.  Second-quarter operating expense dollars
 will likely decline a few percent compared to the first quarter.  We expect
 quarter-end inventories will be flat or down slightly compared to the first
 quarter and that operating cash flow for the quarter will total approximately
 $125 million, raising our cash balance to nearly $2.5 billion."
     Mr. Fishman continued, "We believe our shipments to OEM customers are
 running below their consumption levels, which is bringing down their
 inventories.  We are also encouraged by the trend in our distributors'
 shipments to their customers, which appear to have stabilized following the
 decline we saw last quarter.  Nevertheless, we remain cautious, given the
 still high, albeit declining, order cancellations rates, continued backlog
 churning and uncertainties about end-market demand for the balance of the
 year.  We currently believe that third-quarter revenues could be approximately
 5% below those for the second quarter.  We also believe that the third quarter
 could be our trough quarter, with revenues showing modest sequential growth in
 the fourth quarter.
     "We continue to believe," concluded Mr. Fishman, "that high-performance
 analog and DSP are the right technologies for this decade, and that with our
 strong product and market positions, we will again this year outperform the
 overall semiconductor market, despite the unprecedented volatility in the
 supply chain and end markets."
     Analog Devices will host a conference call Thursday, April 12 at 9:00 a.m.
 Eastern time to answer questions regarding its updated outlook.  Investors who
 wish to listen to the call can dial 712-271-0577 10 to 20 minutes before the
 call begins and provide the password "ADI" when asked.  The call will also be
 carried as a webcast, which can be accessed at www.analog.com by clicking on
 "Investor Relations" and then "Financial Releases."  A replay of the
 conference call will be available for one week either by dialing 402-530-7753
 or by going to www.analog.com and clicking on "Investor Relations" and then
 "Audio Archives."
     Analog Devices plans to announce results for the second quarter of fiscal
 2001 on May 17 following market close, with a conference call to follow at
 4:30 p.m. Eastern time that same day.
 
     Safe harbor statement under the Private Securities Litigation Reform Act
 of 1995:  This release contains forward-looking statements, including our
 statements regarding revenues and operating margins, that are based on our
 current expectations, beliefs, assumptions, estimates, forecasts and
 projections about the industry and markets in which Analog Devices operates.
 The statements contained in this release are not guarantees of future
 performance and involve certain risks, uncertainties and assumptions which are
 difficult to predict.  Therefore, actual outcomes and results may differ
 materially from what is expressed in such forward-looking statements.
 Important factors which may affect future operating results include the
 effects of adverse changes in overall economic conditions, the timing and
 duration of market up turns and downturns, the growth of the markets Analog
 Devices serves, demand for semiconductors generally and for the Company's
 products in particular, the risk that our backlog could decline significantly,
 the ability of the Company to hire engineers and other qualified employees
 needed to meet the expected demands of our largest customers, reversals or
 slowdowns in the markets or customers served by the Company's products and the
 adverse effects of building inventories to meet planned growth that fails to
 materialize, the occurrence and frequency of inventory and lead-time reduction
 cycles, raw material availability, availability of both internal and external
 manufacturing capacity, technological and product development risks,
 competitors' actions and technological innovations and other risk factors
 described in the Company's most recent annual report on Form 10-K.
     With revenues of $772 million for the first quarter of fiscal 2001, Analog
 Devices is a leading manufacturer of precision high-performance integrated
 circuits used in analog and digital signal processing applications.  The
 company is headquartered in Norwood, Massachusetts and employs approximately
 9,800 people worldwide.  It has manufacturing facilities in Massachusetts,
 California, North Carolina, Ireland, the Philippines, Taiwan and the
 United Kingdom.  Analog Devices' stock is listed on the New York Stock
 Exchange and the company is included in the S&P 500 Index.
 
     CONTACT:  James O. Fishbeck, Director of Corporate Communications of
               Analog Devices, 781-461-3282, or james.fishbeck@analog.com.
 
 SOURCE  Analog Devices

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