ADI Profit Tops Street; Q3 Outlook Weak

(RTTNews) - Chip maker Analog Devices Inc (ADI), on Tuesday reported a better-than-expected increase in second-quarter profit, driven by an 18 percent rise in sales and improved gross margins.

The company detailed some weak earnings outlook for the third quarter, while revenues are expected to be in line with expectations.

"We had a very successful second quarter driven by the quality of our innovation, the diversity of our business, and our strong execution," said CEO Vincent Roche in a statement.

Analog Devices, based in Norwood, Massachusetts, reported second-quarter net earnings of $205.3 million or $0.65 per share, compared with $187.4 million or $0.59 per share last year.

Excluding acquisition-related costs and other one-time items, adjusted earnings for the quarter were $0.73 per share. On average, 25 analysts polled by Thomson Reuters estimated earnings of $0.72 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the second quarter rose 18 percent to $821 million from $694.5 million in the prior year. Twenty-three analysts had a consensus revenue estimate of $820.4 million for the quarter.

Growth was strong across its industrial, consumer and communications segments, the company said in a statement.

Gross margin improved to 66.4 percent from 66.1 percent last year, while operating margin dropped to 30.3 percent from 31.7 percent.

For the third quarter, Analog Devices expects adjusted earnings of $0.71 to $0.77 per share on revenues of $825 million to $865 million. Analysts currently expect earnings of $0.77 per share on revenues of $845.84 million for the quarter.

The company declared a cash dividend of $0.40 per share.

Analog Devices makes analog, mixed-signal and digital signal processing integrated circuits used in electronic equipment.

ADI closed Tuesday's regular trade at $63.45, up $0.09 or 0.14%, on a volume of 4 million shares on the Nasdaq. In after hours, the stock dropped $0.36 or 0.57%, trading at $63.09.