Analog Devices Outlook Revised to Stable; Rtgs Afmd.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/20/98--Standard & Poor's today affirmed its ratings on Analog Devices Analog Devices (NYSE: ADI) is an American multinational producer of semiconductor devices. Analog specializes in ADC, DAC, MEMS, and DSP chips for consumer and industrial goods. Analog is presently designing circuits in the 65 nanometer to 3 µm process feature sizes range. Inc. (ADI) and revised its outlook on the company to stable from positive (see list below). The rating reflects ADI's good business position as a supplier of linear and mixed-signal semiconductor devices, good profitability, and conservative financial practices. These strengths are offset by the risks of evolving technology in a highly competitive market. The outlook revision incorporates increasing competition in the key digital signal processor A digital signal processor (DSP) is a specialized microprocessor designed specifically for digital signal processing, generally in real-time computing. Characteristics of typical Digital Signal Processors
ADI has been a leading supplier of standardized semiconductors to a maturing niche market A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. of low-volume industrial and aerospace customers. ADI has also added high-end consumer and communications products to its portfolio, but has a minor presence in the mass market analog chip An analog chip is a set of miniature electronic analog circuits formed on a single piece of semiconductor material. The circuits in analog chips operate with voltage and current varying in a continuous fashion; in contrast, digital chips only use and create voltages sector. During the past several years, ADI has shifted its focus toward the rapidly growing digital signal processor segment, which is now about one-third of sales. However, the market is dominated by much larger companies. Overall sales levels have grown modestly through the current industry recession. However, demand for advanced chips used in semiconductor test equipment has weakened, while market conditions are generally depressed in the distribution channel and in Asia. Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: have been in the upper 20% area for the past several years, reflecting continued solid gross margins and a prudent expansion plan. Still, margins are likely to decline due to expected weak sales of specialized chips to the test equipment niche and largely fixed operating costs operating costs npl → gastos mpl operacionales . Funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. coverage of debt is good for the rating category, at about 80%, while the company has no net debt. OUTLOOK: STABLE Industry conditions are expected to remain stressed, potentially impacting ongoing sales of some high-margin product lines, while digital signal processor competition is likely to become increasingly aggressive, which is likely to preclude higher ratings over the near to intermediate period. ADI's continued good position in its industry as well as ongoing conservative financial practices provide a good level of downside protection Downside Protection Generally used in connection with covered call writing, this is the cushion against loss, in case of a price decline by the underlying security, that is afforded by the written call option. , Standard & Poor's said. -- CreditWire -0-
OUTSTANDING RATINGS AFFIRMED
Rating
Corporate credit rating BBB+
Bank loan rating BBB+
Subordinated debt BBB
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