Digital signal processing chip maker, Analog Devices Inc reported first-quarter earnings Wednesday that edged out Wall Street estimates but showed a significant year-over-year decline. Net income for the period was $29.9m – or $0.18 per share against the First Call estimate of $0.17 – compared to a profit of $3.2m for a year-ago quarter which included a $37.1m charge stemming from a change in accounting principles. Net of the charge, earnings for the latest quarter were down 25.5% from $40.3m last year. First quarter revenue also declined 5.4% to $300.5m. Sequentially, however, the first quarter results showed a slight improvement with revenues up $3m above those in the prior quarter ended in October. Operating profit in the quarter also rose to 13% of sales from 11% in the October quarter and EPS were up $0.02. OEM orders also rose 10% sequentially and the OEM backlog increased by more than $20m, creating a positive outlook for second-quarter revenues. Looking ahead, the company said revenue growth of 6% to 8% for the current quarter appears realistic and EPS could grow as much as 20% sequentially if revenues come in at the high end of the expected range. Yesterday, ADI said it would be acquiring two DSP tools companies, Nashua, New Hampshire-based White Mountain DSP Inc and Edinburgh Portable Compilers of Edinburgh, Scotland (CI No 3,601). White Mountain claims to be the world’s leading supplier of emulators for digital signal processors, while EPC specializes in software compilers for high performance, embedded applications. The combined purchase price will be $20m in a mix of cash and stock and could increase by an unspecified amount due to earn-outs based on future sales goals. ADI will take a second-quarter charge of slightly less than $5m in connection with the purchases which the company believes will be non-dilutive on a combined basis.
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