Earnings per share were $0.50, double the $0.25 reported for the year-ago quarter and $0.04 below the fourth quarter’s $0.54. All financial information in the text of this release refers to pro forma results, which exclude investment gains and acquisition-related expenses.

Our first-quarter revenues were in line with the revised expectations we communicated on January 17, said Jerald G. Fish man, President and CEO. Analog product revenues grew 61% from the same period last year and were up 1% compared to the fourth quarter. Sell-through of analog products in distribution declined 9% sequentially, while sales to OEM customers increased 10% sequentially.

Our DSP revenues were up 48% over last year’s first quarter, but declined 18% sequentially, primarily due to cancellations and backlog adjustments from computer and telecommunication customers in North America and Southeast Asia as they attempted to more closely align their inventories with the softening end demand they were seeing from their customers.

Regarding Analog’s financial performance, Mr. Fishman said, Our gross margin remained strong in the first quarter. At 58.6% of sales, it was up 450 basis points from last year’s first quarter and flat sequentially. Operating expense growth was held to 6% from the fourth quarter as we began to constrain expenses late in the quarter. As a result, operating profit was 31.7% of sales, or $245 million, which was more than double the dollar level for last year’s first quarter.

Our balance sheet remains extremely strong, he continued. Cash and short-term investments increased sequentially by $115 million to $2.35 billion, after first-quarter capital expenditures of $139 million. Inventories grew $25 million, and now represent 100 days’ cost of sales. We believe this is reasonable given the rapid change in the business environment. Accounts receivable declined by $43 million and days sales outstanding improved by 3 days to 49.

The analog business continues to be a great business for ADI, Mr. Fishman observed. We have grown this business at above-market growth rates over the last few years and have made considerable progress on improving our operating margins. And we now have more than 40% market share in data converters and high-performance amplifiers, the two most important analog product categories. We believe we are in an excellent position to further strengthen our competitive position during the current slowdown and resume growth in analog product revenues when conditions improve.

Our DSP business has gained significant market share over the past two years, he added. With our strong product portfolio and the major design-ins we have won in some of the fastest-growing end markets, we believe that our DSP sales growth could resume during the second half of the year.

Commenting on the near term, Mr. Fishman said, We are currently planning for second-quarter revenues to be in the range of $710 to $725 million, or down about 6 to 8% sequentially and up 22 to 25% from last year’s second quarter. Approximately half of this decline is expected to come from a significant reduction in sales to ATE customers. We believe that at this sales level earnings per share could be about $0.43 to $0.44.

For the balance of the year, we are hopeful that as supply and demand come into better balance we can return to sequential growth in the second half of the year. Under these circumstances, we believe our fiscal 2001 revenues could grow approximately 20% over last year, with earnings per share in the range of $1.85 to $1.90.

Mr. Fishman concluded, We believe that as business conditions improve, ADI will emerge well positioned to continue growing sales, profits and market shares in high-performance analog and DSP, the two best places to be in the semiconductor industry.