Analog Devices, Inc. (NASDAQ:ADI) stock fell 1.76% (As on February 22, 11:25:35 AM UTC-4, Source: Google Finance) after the company forecast second-quarter profit and revenue below estimates, as it grapples with uncertain demand from the industrial and automotive sectors. The company’s industrial unit, which accounts for nearly 50% of its revenue, reported a 31% decline in the first quarter due to the ongoing supply glut. Growth in the automotive unit also slowed to a near-two year low of 9%. The auto industry has pulled back on chip orders in recent months as high interest rates affect demand for vehicles. Research firm Canalys estimate growth in the global electric-vehicle market is set to slow to 27.1% this year as a reduction in state subsidies makes new cars less appealing to buyers. Analog Devices has observed a sequential improvement in bookings, which are nearing parity, and anticipates that the headwinds from inventory corrections will diminish in the April 2024 quarter. The company expects a 20% quarter-over-quarter decline in Industrial revenues for the same period. Meanwhile, the company has appointed Richard C. Puccio as EVP and Chief Financial Officer
ADI in the first quarter of FY 24 has reported the adjusted earnings per share of $1.73, beating the analysts’ estimates for the adjusted earnings per share of $1.71. The company had reported 23 percent decline in the adjusted revenue growth to $2.51 billion in the first quarter of FY 24, beating the analysts’ estimates for revenue of $2.50 billion.
Additionally, the company has declared a quarterly cash dividend of $0.92 per outstanding share of common stock. The dividend will be paid on March 15, 2024 to all shareholders of record at the close of business on March 5, 2024. The company has delivered operating cash flow of $4.6 billion and free cash flow of $3.2 billion on a trailing twelve-month basis. The company has returned over $600 million to shareholders through dividends and repurchases in the first quarter.
The company expects $2.10 billion in second-quarter revenue, plus or minus 100 million, below analysts’ average estimate of $2.36 billion, according to LSEG data. Adjusted profit for the quarter is expected to be $1.26 per share, plus or minus 10 cents, also below estimates of $1.56. At the midpoint of this revenue outlook, ADI expects reported operating margin to be of approximately 15.1%, +/-200 bps, and adjusted operating margin of approximately 37.0%, +/-100 bps.