Analog Devices (ADI.O), a semiconductor manufacturer struggling with a continuous supply glut, predicted first-quarter revenue and profit below market expectations on Tuesday.
Customers affected by inflation have stopped placing new orders, which has resulted in surplus supply at semiconductor businesses as a pandemic-driven buying frenzy has subsided.
“During the first half of this year, we do expect to get this overhang of inventory behind us and get back to a more normalized growth pattern in the second half,” Vincent Roche, our CEO, stated.
Analog’s attempts to save inventories by delaying capacity expansions are anticipated to contribute to a $500 million reduction in capital expenditures for the company this fiscal year.
Jim Mollica, interim finance chief, stated that inventory decreased by $70 million in the fourth quarter compared to the previous quarter and that this trend should continue in the second quarter.
Based on LSEG data, the company projects first-quarter revenue of $2.50 billion, give or take $100 million. This is lower than projections of $2.68 billion.
Adjusted first-quarter earnings are predicted to be $1.70 per share, plus or minus 10 cents, which is likewise less than the $1.90 predicted.
The company’s orders have also been negatively impacted by cautious spending by automakers, who are worried about a slowdown in their electric vehicle industries.
Car sales, which accounted for almost 25% of the total, increased at the slowest rate in at least two years, with Analog’s growth at just 14%.
Revenue decreased 16% to $2.72 billion, but above forecasts. Sales of its core industrial business fell by 20%.
“Weaknesses in the industrial sector broadened and hit all the various market segments with one exception: the aerospace and defense area,” Roche, the company’s chief executive officer, said.
The adjusted earnings per share reached $2.01, mostly aligned with forecasts. The company’s stock dropped by more than 1%.
