Q2 revenue better than forecast

In February 2009, ADI forecast revenue between $429m and $453m for the quarter, however, the results have been bettered due to increased sales to communications infrastructure and consumer customers and a general abatement of inventory reductions by customers. Although the revenue of $475m, is a decrease of 27% from the same period one year ago, president and ceo, Jerald Fishman said that ADI's business model would allow the company to generate solid profits and cash flow. He added that that strategic investments and cost reductions would be the initiatives to afford the company leverage when demand recovers. Fishman said: "Orders to ADI and our distributors recovered significantly in the second quarter, as customer inventory reductions subsided. Our book to bill ratio for the second quarter, as measured by end customer bookings, was slightly above one for the first time since the third quarter of fiscal 2008 and our third quarter opening backlog was up from last quarter. In addition, order levels were stable throughout the second quarter and have remained at these levels through the first two weeks of May. Nevertheless, our lead times remain short and we are still receiving a significant portion of new orders as turns orders, thereby limiting visibility." Given these factors, Fishman said that third quarter revenue would be flat and warned that ADI would continue to reduce inventories in the third quarter. As well as keeping tight control over operating expenses. "As a result," continued Fishman, "we expect gross margins to be approximately 54% to 55%, depending on end market revenue mix and factory utilisation, and are planning for operating expenses to remain approximately flat sequentially."