The document provides an analysis of Analog Devices, Inc. (ADI) conducted by Penn State Investment Association. It summarizes ADI's business operations, financial performance, growth opportunities in key markets like industrial and healthcare, and risks. It also benchmarks ADI against competitors and provides projections. The top three reasons recommended to "bench" or not invest in ADI currently are not stated.
1. Penn State Investment AssociationInformation Technology Sector Analog Devices, Inc. (ADI) NYSE Joe Eirkson, Katie Lally, Matt Lochansky The Nittany Lion Fund, LLC.
28. Best-in-Class—Data Converters Market leader in data converter technology (46% market share--exposed to literally every region) In 2010, accounted for 47% of sales (29% increase from 2009) Data converter market expected to increase 9% every year through 2015 Demand for ADI converter technology driven by: Proliferation of digital systems Increasing number of channels of signal processing in new, emerging applications Data converters determine the overall performance of a systemADI offers high-performance, best-in-class solutions Continuously improving architecture and process technologies to meet customers’ needs Customer Design Process: Begins with ADI data converters incorporates other components of ADI product portfolio
29. Company Risk Dependence on third-party subcontractors: Relies on subcontractors and third-party wafer fabricators Generates 50% of its revenue from products at third-party wafer-fabrication facilities Risks: reduced control over availability, capacity utilization, delivery schedules, manufacturing yields and quality and assurance costs Lack of long-term sales contracts: Demand may be volatile in certain end-markers (Long-term contracts are unusual for Semi companies due to constant technological change and upgrades) Intense competition: Technological Pricing Fluctuations in foreign currency: Very sensitivederives 80% of revenue from international markets