In Q3 the product mix shifted from I/Com (higher GM) towards Consumers (lower GM) ... resulting in an overall lower GM of 54.1%.
Shutting down of Cambridge facility and the 6-inch line in Ireland would result in substantial savings in terms of capital spending and subsequent depreciation. But it will take at least another year before these savings are reflected in the books.
If these savings are realized, and the product mix returns to the historical trends, and the revenues pick up some, the company may see a pickup in earnings. Although this would take some time and patience ...
It would serve you well to keep in mind that ADI unloaded some $200M in "unprofitable" rev. (handest chipsets and CPU controllers), those were high growth areas, now that most of its rev. is in slower growth areas and supposedly higher margins. All we have seen so far is slower growth and ave. GM. It appears that ADI cost structure is not competitive or the myth of "high end".... is invalid. In either case, what you have a a slow growth co. with ave GM. so you be the judge. This will only move with the tide!!
The reality is those who sold bought back at open. It's called manipulation in my book, and is why as a rule I generally ignore after hours trading unless there is good reason to pay attention. There was no reason for the selling after-hours yesterday, and it's clear to me ADI is going to break out to the upside.
LOL!... Play the game... down after hours, probably down early in the AM (maybe not, depends on how long the street will risk playing with weak hands to get their shares), then watch for the whiplash action into the $30's once the weak hands are shaken out...
I'm averaged at $22 and added more before the closing bell. Now it's time to sit back and enjoy the show.
ADI has some good action ahead of it. Smart money is in and ignores the shakeouts.
there was nothing wrong with the earnings or the cc, but they will get punished tomorrow by $1.50 or $2.00. that's the way the street thinks. you get punished for being prudent and conservative and burning inventory and generating cash instead of expanding capacity by increasing utilization.
it will be back to $27 in a couple of weeks if the market holds up.