Linear Technology Earnings: Shrinking Margins for Fifth Consecutive Quarter, Net Income Falls

S&P 500 (NYSE:SPY) component Linear Technology Corporation (NASDAQ:LLTC) reported its results for the first quarter. Linear Technology offers a line of standard high performance linear integrated circuits.

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Linear Technology Corporation Earnings Cheat Sheet

Results: Net income for Linear Technology Corporation fell to $105.2 million (45 cents per share) vs. $108.4 million (47 cents per share) a year earlier. This is a decline of 3% from the year-earlier quarter.

Revenue: Rose 1.6% to $335.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Linear Technology Corporation fell in line with the mean analyst estimate of 45 cents per share. Analysts were expecting revenue of $330.3 million.

Quoting Management: According to Lothar Maier, CEO, “We met the midpoint of our revenue guidance for our first fiscal quarter of 2013, as sales grew 1.6% compared to the preceding fourth quarter of fiscal 2012. In addition, net income improved and operating income as a percent of sales improved to 46.3%. Though we are pleased with these results, external global market conditions have continued to weaken. While the automotive market continues to show strength on higher bookings, this increase was offset by lower bookings in our other major markets, particularly the industrial and computer markets. Forecasting continues to be difficult in the current environment.”

Key Stats:

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 0.8 percentage point from the year-earlier quarter to 75%. In that span, margins have contracted an average of 2.4 percentage points per quarter on a year-over-year basis.

A year-over-year revenue increase last quarter snaps a streak of four consecutive quarters of revenue declines. The worst quarter in that span was the second quarter of the last fiscal year, which saw a 23.3% decrease.

The company fell in line with estimates last quarter after beating expectations in the previous two quarters. In the fourth quarter of the last fiscal year, it topped the mark by 2 cents, and in the third quarter of the last fiscal year, it was ahead by one cent.

Net income has dropped 25.6% year-over-year on average across the last five quarters. Performance was hurt by a 38.9% decline in the second quarter of the last fiscal year from the year-earlier quarter.

Looking Forward: Over the past sixty days, the outlook for the company’s performance next quarter has become increasingly unfavorable. The average estimate for the second quarter is 48 cents per share, a drop from 49 cents. At $1.73 per share, the average estimate for the fiscal year has fallen from $1.75 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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