Chipmaker Analog Devices' forecasts held back by inventory corrections
Adds CEO, CFO comments in paragraphs 3,5 and 10, adds capex in paragraph 4
Nov 21 (Reuters) -Analog Devices ADI.O projected first-quarter revenue and profit below market estimates on Tuesday as the chipmaker grappleswith an ongoingsupply glut in the semiconductor industry.
Inflation-hit customers have refrained from placing new orders for chips, leading to excess supply at semiconductor companies after a pandemic-driven buying spree fizzled out.
"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," said CEO Vincent Roche.
Analog's effortsto reduce inventory by slowing its paceof capacity expansions are expected to help lower the company's capitalexpenditure by around $500 million this fiscal year.
"Inventory in the fourthquarter was down $70 million (quarter-on-quarter)," said interim finance chief Jim Mollica, adding that it should continue to fall inthe second quarter.
The company expects first-quarterrevenue of$2.50 billion, plus or minus $100 million, compared with estimatesof $2.68 billion, according to LSEG data.
First-quarter adjusted earnings are expected to be $1.70 per share, plus or minus 10 cents, also below estimates of $1.90.
Cautious spending by automakers fearing a slowdown in their electric-vehicle businesses has also weighedon the company's orders.
Analog'sautomotive sales, which made upmore than a quarter of the total, grew just 14% - its slowest pace in at least two years.
Overall, revenue fell 16% to $2.72 billion, but beat estimates. Its mainstayindustrial business saw a 20% drop in sales.
"Weakness in the industrial sector broadened and hit all the various market segments with one exception, the aerospace and defense area," CEO Roche said.
Adjusted profit was $2.01 per share, largely in line with expectations.
Shares of the firm fell more than 1%.
Reporting by Arsheeya Bajwa in Bengaluru; Editing by Tasim Zahid and Devika Syamnath
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