Linear Technology Shares Fall On Disappointing Outlook
October 13 2010 - 2:33PM
Dow Jones News
Shares of Linear Technology Corp. (LLTC) fell sharply Wednesday,
a day after the company issued a weaker-than-projected sales
outlook that dealt another blow to the broader chip sector already
jittery about a softening personal-computer market.
Linear was down more than 4% to $30.30 after warning that it now
expects fiscal second-quarter revenue to be flat to down 4% from
the $388.6 million it posted in the first quarter. A consensus
estimate by Thomson Reuters put second-quarter revenue at $384
million.
Linear makes analog chips, which transform such elements as
sound and temperature into digital signals for computers to
understand. The company's chips are used in factories and a range
of devices in the communications and automotive industries.
The company's warning triggered a selloff in shares of other
analog chip makers, including Texas Instruments Inc. (TXN). TI was
down 1.8% at last check.
"As in late 2008, Linear's tempered guidance is likely an early
indication of where [semiconductor] fundamentals are headed, which
likely throws cold water on the entire group," Jefferies & Co.
analyst Blayne Curtis said in a note.
"This miss is particularly important as weakness in the PC,
consumer, and communications markets is well known, but there had
been some lingering debate whether or not orders in the industrial
end market had actually started to fall off too, which is now
apparent," Curtis added.
FBR Capital's Craig Berger said in a note that the company's
management "did say bookings fell sequentially, likely due to
industrial customers no longer replenishing inventories as
aggressively."
"Indeed, we think this industrial-related ship-ahead adjustment
could stretch into calendar first quarter 2011," he added.
-By Benjamin Pimentel; 415-439-6400;
AskNewswires@dowjones.com
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