Linear Technology Shares Fall On Disappointing Outlook

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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