Analog Devices Conference Call Highlights

reported its third quarter earnings on Tuesday. Shares of the company are up 5 percent. Below are some key highlights from its conference call. • Revenue in the fourth quarter totaled $814 million, increasing 12% sequentially and 20% year over year. • On an organic bases, revenue increased 2% sequentially and 8% year over year. • Communications infrastructure applications outperformed our revenue plan, while the industrial, automotive, and consumer end markets were about in line with our expectations for the quarter. • Revenue from communications infrastructure customers represented 27% of total sales and increased 31% sequentially in the fourth quarter, with both our organic and acquisition-related revenue growing faster than expected. • On an organic basis, fourth quarter communications revenue grew 5% sequentially and 23% year over year. • And for the fiscal year, communications infrastructure revenues totaled $681 million. • Industrial customers represented 45% of total revenue in the quarter, increasing 6% sequentially and 19% year over year. • On an organic basis, industrial performed as expected, declining 4% sequentially. • For the fiscal year, industrial application revenue totaled $1.3 billion. • Our automotive business grew in line with expectations, increasing 3% sequentially and 2% year over year, and this market represented 17% of our total revenue in the fourth quarter. • In fiscal 2014, our automotive business grew 9% or about two times the rate of vehicle unit growth. • Automotive is now a $500-million-plus a year business, having grown at a 20%-plus CAGR over the last five years and consequently more than doubling revenues since fiscal 2009. • Sales in the fourth quarter increased to a record $814 million, well above the midpoint of guidance, and diluted earnings per share excluding special items grew to $0.69, near the high-end of the range. • Gross margin at 66.4% of sales was better than our guidance on a better mix of business. • Operating profit before tax increased to $271 million or 33.2% of sales. • For the year, we generated operating cash flow of $872 million or 30% of sales and free cash flow of $694 million or 24% of sales. • In addition during the year, we increased our dividend by 9%, which represented the 11th dividend increase in the last 10 years. • During the year, we repurchased $356 million of our stock. In total, we returned $811 million or 117% of free cash flow to shareholders in the form of dividends and share repurchases. • Based on lower expected sequential revenue, we plan to reduce production levels in the first quarter to the low 60%s from their current low 70%s levels. • As a result, we expect gross margins in the first quarter to be approximately 65%. • We expect operating expenses in the first quarter to decline sequentially to approximately $263 million, or down approximately $7 million.