An introduction and guide about Analog Device Inc.
suruchi is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
‘Technology’ is a key word in the modern world, as we can see that we are growing globally in every field such as defense, aerospace industries and consumer products. Analog Devices, Inc. (NASDAQ: ADI) is a leader in providing the world with newest technology in the field of high performance semiconductors and signal processing applications.
What makes them the leader in their field?
Analog have strong competitors like ST micro electronics NV (NYSE: STM)-Into designing and making of a range of semi-conductor integrated circuits, the other major competitor NXP Semiconductors NV (NASDAQ: NXPI) -provides mix signal solutions unlike Analog who diversifies in making all these three-
Analog- A device or system that represents changing values as continuously variable physical quantities.
Digital Signal Processor (DSP) can handle signals at incredible speed and works through a chip which takes real world signal and changes them into digital signal.
Mixed signal device (MSD) – It combines Analog and DSP elements in a single device and acts as a connector between these two for signal generating operations.
The more electronics go digital, the more will be the demand and growth for these three devices and ADI makes it possible by making all of them, thus becoming a competitor in all the three fields.
The recently announced results of Analog do not project a very interesting picture of its performance. Though the revenue has increased by 2% from the previous quarter but they have been falling consistently since last four quarters resulting in a fall of 3% to $695 million from the last year. Net income also fell from $83.5 million to $179.2 million, which is a fall of 2.4% from the year earlier. The result is an outcome of overall weak response in terms of orders by their clients leading to less production thereby leading to less income. This trend seems to continue for some more time due to a need to reduce and maintain inventories by Analog and its clients too.
Beware of These Competitors
ST Micro electronics (NYSE: STM) - Leading MEMS manufacturer involved in making a range of semiconductor integrated circuit looks like a little mountain which can make large streams flow from it. They have been supplying censors to Nintendo (The giant in the video-game industry) and also working to make a new range of highly adaptive device that optimizes handsets.
Another tough competitor on the scene is NXP Semiconductors NV (NASDAQ: NXPI) - Though smaller in size in terms of market capitalization compared to Analog, it is expected to rise equally considering its third quarter results (with an increase in revenues) and can be seen competing strongly, rather outpacing ADI in the coming future with its latest technology and invention of communication chips. The chip has the capacity of dual function of performing the work of a talking media and also a source of making quick and easy payments without delay, by sending information to distant areas without close contact which surely seems to uplift sales in the market for it.
Analog too is offering and supplying 4G AND LTE to leading communication brands such as SAMSUNG and APPLE which are very much in demand. It has also introduced AFE digital X-ray Analog front end with features of highest image quality, lowest noise till date in performing multiple power mode options and reduced exposure of patient to X-rays. Thus the company has to grow with the growing demand for these updated devices as they r going to change the face of communication and health world.
The sweets and sours on offer for the future
The company’s next quarter performance looks unfavorable as estimates have not met expectations, still few factors worth considering are: getting recognized among those companies to create a permanent loyal clientele by taking full care to protect the environment; Analog delivers its orders in time amidst all odds in professional and global. I still see it standing firmly and boldly and recommend a “BUY” for it.
Most importantly- considering the current status and progress of the two competitors (ST& NXP) ADI should over look their small size and rather focus and keep an eye on their performance. Analog needs to be more updated with the latest technology which can benefit its clients. It has to take the bull by the horns as after all “It’s About Survival Of The Fittest.”
suruchichoudhary has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend NXP Semiconductors . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!