Penn State Investment AssociationInformation Technology Sector<br />Analog Devices, Inc.<br />(ADI) NYSE<br />Joe Eirkson,...
Team Recommendation: Bench<br />Top Three Reasons to Bench:<br />
Company Description<br /><ul><li>Analog Devices, Inc. is a world leader in the design, manufacture and marketing of high-p...
New organizational structure in 2009 introduced two focus groups:
Core Products and Technologies (CPT): product focused
Strategic Market Segments (SMS): end market focused
Operates in 18 countries60,000 customers
Headquartered in Norwood, Massachusetts
Employs approximately 8,300 people
Operational business segments include: Industrial, Communication, Consumer, Automotive and Computer</li></ul>CEO <br />Jer...
Revenue Breakdown<br />
Industrial Segment Growth<br />Industrial and Instrumentation<br />Healthcare<br /><ul><li>Expected 8-12% growth over 5 years
Shift in motor control technology increased demand for signal processing
Demand driven by customers’ needs for increased:
Energy efficiency
Industrial automation
Advanced instrumentation
Significant growth opportunities in Asian markets—particularly China
Expected 10-14% growth over 5 years
Increased demand for imaging and patient monitoring
Upcoming SlideShare
Loading in...5
×

Analog Devices (ADI) Bench

1,065

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,065
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
23
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Analog Devices (ADI) Bench

  1. 1. Penn State Investment AssociationInformation Technology Sector<br />Analog Devices, Inc.<br />(ADI) NYSE<br />Joe Eirkson, Katie Lally, Matt Lochansky<br />The Nittany Lion Fund, LLC.<br />
  2. 2. Team Recommendation: Bench<br />Top Three Reasons to Bench:<br />
  3. 3. Company Description<br /><ul><li>Analog Devices, Inc. is a world leader in the design, manufacture and marketing of high-performance analog, mixed-signal and digital signal processing integrated circuits (ICs) used in virtually all types of electronic equipment
  4. 4. New organizational structure in 2009 introduced two focus groups:
  5. 5. Core Products and Technologies (CPT): product focused
  6. 6. Strategic Market Segments (SMS): end market focused
  7. 7. Operates in 18 countries60,000 customers
  8. 8. Headquartered in Norwood, Massachusetts
  9. 9. Employs approximately 8,300 people
  10. 10. Operational business segments include: Industrial, Communication, Consumer, Automotive and Computer</li></ul>CEO <br />Jerald Fishman<br />3<br />
  11. 11. Revenue Breakdown<br />
  12. 12. Industrial Segment Growth<br />Industrial and Instrumentation<br />Healthcare<br /><ul><li>Expected 8-12% growth over 5 years
  13. 13. Shift in motor control technology increased demand for signal processing
  14. 14. Demand driven by customers’ needs for increased:
  15. 15. Energy efficiency
  16. 16. Industrial automation
  17. 17. Advanced instrumentation
  18. 18. Significant growth opportunities in Asian markets—particularly China
  19. 19. Expected 10-14% growth over 5 years
  20. 20. Increased demand for imaging and patient monitoring
  21. 21. ADI is a market leader
  22. 22. Strategic partners optimistic about 2011 spending
  23. 23. Healthcare trends to increase demand:
  24. 24. Increased need for highest speed and channel count in medical imagining systems
  25. 25. Demand for improved measurementincrease diagnostic accuracy
  26. 26. Expansion of telemedicine; portability
  27. 27. Greater need for secure communications capabilities</li></li></ul><li>Mobile Infrastructure Exposure<br />Appetite for data/video continues to accelerate the need for more advanced based systems, 4G or LTEplays directly to ADI’s signal processing strengths<br />60% of ADI’s Communication segment comes from communication infrastructure and wireless<br />Virtually every wireless call, text, picture or download today passes through an ADI IC<br />Drivers of growth:<br />Need for higher performance radios<br />Higher density of channels to support increased data<br />Improved power efficiency<br />Smaller footprint<br />Lower cost per channel<br />Short-term and long-term benefitsupgrades to 3G and 4G now and will continue in the future<br />More rollouts /upgrades<br />
  28. 28. Best-in-Class—Data Converters<br />Market leader in data converter technology (46% market share--exposed to literally every region)<br />In 2010, accounted for 47% of sales (29% increase from 2009)<br />Data converter market expected to increase 9% every year through 2015<br />Demand for ADI converter technology driven by:<br />Proliferation of digital systems<br />Increasing number of channels of signal processing in new, emerging applications<br />Data converters determine the overall performance of a systemADI offers high-performance, best-in-class solutions<br />Continuously improving architecture and process technologies to meet customers’ needs<br />Customer Design Process:<br />Begins with ADI data converters incorporates other components of ADI product portfolio<br />
  29. 29. Company Risk<br />Dependence on third-party subcontractors:<br />Relies on subcontractors and third-party wafer fabricators<br />Generates 50% of its revenue from products at third-party wafer-fabrication facilities<br />Risks: reduced control over availability, capacity utilization, delivery schedules, manufacturing yields and quality and assurance costs<br />Lack of long-term sales contracts:<br />Demand may be volatile in certain end-markers<br />(Long-term contracts are unusual for Semi companies due to constant technological change and upgrades)<br />Intense competition:<br />Technological<br />Pricing<br />Fluctuations in foreign currency:<br />Very sensitivederives 80% of revenue from international markets<br />
  30. 30. Sector Risk<br /><ul><li>Industry is highly cyclical—vulnerable to economic downturns
  31. 31. Most semiconductor companies carry risk due to increasing R&D expenses in the industry
  32. 32. Higher inventory levels, lower utilization rates and softer orders pose risks to industry’s profitability
  33. 33. Increased consolidation across industryeconomies of scale</li></li></ul><li>Sector Strategy<br />ONNN’s Back-Up Plan<br /><ul><li>The general Semi market is expected to grow 5-9% this year
  34. 34. Play to reduce exposure to the Auto Industry
  35. 35. Negative outlook for Autos for the next 1-2 years
  36. 36. Auto market accounts for only 13% of ADI’s revenues v. 22% of ONNN’s revenues
  37. 37. Diversify geographic exposureless reliance on one region (like ONNN and Japan)</li></ul>Current Allocation<br />Proposed Allocation<br />10<br />
  38. 38. Comparable Analysis <br />11<br />
  39. 39. Ratio Analysis <br />12<br />
  40. 40. Five Year Summary<br />13<br />
  41. 41. Growth Analysis & CAGRs<br />14<br />
  42. 42. Projections<br />15<br />
  43. 43. Discounted Cash Flow<br />16<br />
  44. 44. One Year Stock Chart<br />17<br />
  45. 45. Debt Distribution<br />18<br />
  46. 46. Team Recommendation: Bench<br />Top Three Reasons to Bench:<br />
  47. 47. Questions or Comments?<br />
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×