ticker: LLTC

[kherman]

Having an open discussion on this stock. Please keep arguments within the realms of sanity No flaming, etc.

Karl

 

[kherman]

I rate this a HOLD at current quotation.

Buy it at $24 and Strong Buy at $20.

Why I like this stock:
1) LLTC historically hikes their dividend by 25% annually. Even this year when earnings dropped 50%
2) Debt = 0.
3) management is proven.
4) analog is not subject to pricing wars. Very specialized products with specific specs on thechips.
... more to come ...

Karl

 

[Woodie]

OK, I'll bite.

Who are their competitors?
Sector prospects?
How soon until customers can move to a substitute product?

Current (mostly) price is $28, up $2 today.

 

[kherman]

Originally posted by: Woodie
OK, I'll bite.

Who are their competitors?
Sector prospects?
How soon until customers can move to a substitute product?

Current (mostly) price is $28, up $2 today.

Competitors:
Two that come to mind are MXIM(Maxim Integrated Products Inc) and ADI(analog Devices)

Sector prospects:
Short term, volatile
Long term, maybe 15% annualized growth for the sector. LLTC is projected at 25% annaulized growth. Even though it's on hte high sid, I agree with it.

How soon until customers can move to a substitute product?
Not any time soon. It's not like how AMD and Intel are interchangable for all x86 platforms. An anlog chip for a motorola cell phone can't simply be supplied by another manufacturer.

 

[Woodie]

You state that Motorola is a key customer for a particular product. Am I to assume that LLTC has other big customers and products?

My concern is that a large portion(?) of their business is tied to a single product for a single customer.

 

[kherman]

Originally posted by: Woodie
You state that Motorola is a key customer for a particular product. Am I to assume that LLTC has other big customers and products?

My concern is that a large portion(?) of their business is tied to a single product for a single customer.

Actually, motorola was an example. They do sell parts for alot of the cell phone manufacturers though, so it is very likely that Motarolla is a customer. The PC you are working on might have parts made by LLTC.

To answer your question, "My concern is that a large portion(?) of their business is tied to a single product for a single customer", this is not the case.

From here.

Linear Technology Corporation designs, manufactures and markets a broad line of standard high-performance linear integrated circuits (ICs). Applications for the Company's products include telecommunications, cellular telephones, networking products, optical switches, notebook and desktop computers, computer peripherals, video/multimedia, industrial instrumentation, security monitoring devices, high-end consumer products, digital cameras and MP3 players, complex medical devices, automotive electronics, factory automation, process control and military and space systems.

I have the breakdowns at home. Sales are 33% mobile, 5% military, 30% PCs, etc. I think the numbers I stated are fairly accurate. I can get exact numbers later on if you'd like.

Also, here's their web page: LINK

 

[Woodie]

No need for more detailed numbers, I think you've answered that issue.

You mentioned 25% dividend hikes....how long have they been doing that?

 

[kherman]

Originally posted by: Woodie
No need for more detailed numbers, I think you've answered that issue.

You mentioned 25% dividend hikes....how long have they been doing that?

Just went and did a bunch of math on historical numbers.

1994: $0.24 dividend for the year
2002: $0.16 dividend for the year

3 splits in between (2:1)

That means adjusted for dividend splits.
2002: $0.16*(2^3)
1994: $0.24
or
2002: $1.28
1994: $0.24

For percentage:
(1.28-0.24)/0.24
= 1.04/0.24
= 4.33

4.33^(1/8)=1.20

So, over 8 years they hiked the dividend an average of 20% annually since 1994. They've had a dividend since 1992.

My 25% was way off, but 20% isn't that bad either

I think I screwed the math up though and don't have time to fix it.

0.24*(1.20^8) doesn't come to 1.28 like it should.

0.24*(1.25^8) comes closer though.So, maybe 25% since 1994 is acurate????

 

[Woodie]

Pretty impressive for a tech company. I don't expect any tech companies to deliver dividends at all. Old fashioned as it may seem, I look for dividends (and dividend growth) in any company I invest in. It's out of style, but it makes the downturns just a little bit easier to take, since I'm getting something out of the stock every quarter, without having to sell anything.

As I think about it, that's a key part of my portfolio diversification strategy:
I don't reinvest any dividends received, I just collect the cash. When the cash accumulates to a certain level, I go ahead and purchase another chunk of stock.

Thanks kherman I now have a tech stock that provides dividends!

 

[kherman]

Originally posted by: Woodie
Pretty impressive for a tech company. I don't expect any tech companies to deliver dividends at all. Old fashioned as it may seem, I look for dividends (and dividend growth) in any company I invest in. It's out of style, but it makes the downturns just a little bit easier to take, since I'm getting something out of the stock every quarter, without having to sell anything.

As I think about it, that's a key part of my portfolio diversification strategy:
I don't reinvest any dividends received, I just collect the cash. When the cash accumulates to a certain level, I go ahead and purchase another chunk of stock.

Thanks kherman I now have a tech stock that provides dividends!

As a long term investor, your strategy matches mine 100%. Atleast what you mentioned. It's a great way to do long term investing. I do covered calls on top of this strategy too.

I let the dividends collect for reinvestment (diversiification) later on, just like you

All !!4!! of my positions meet this criteria.

As far a semi stocks go, I wouldn't consider any other company than LLTC. I'm glad yo like them and bought in

If I could trouble you, what other companies have you investd in?

 

[Woodie]

Because of company options...
C - Citigroup. Not a particularly great stock, but it does pay dividends, and it's likely to do nicely this year, along with the whole sector, in reaction to the current bear market. Citi is in so many markets (global as well) so I think it's well diversified. In addition, the CEO is Sandy Weill, who has a (well-earned) reputation for increasing stock-holder value.
TAP.A - Travelers Property Casualty. Recently spun off by Citigroup, it's one of the strongest P&Cs, and is now in a position to acquire other companies. Will begin paying dividends 1Q03. Insurance is a cyclical market, and right now pricing is going up, giving better margins, but many insurance carriers took a significant hit from 9/11 as well as the ensuing drop in the market. A number of smaller players are really hurting, so the signs are that there will some consolidation within the industry. This company is likely to be an acquirer.
NVDA - NVidia. They've just released a new chipset, after a pretty good showing with their first version. In addition, they were beaten down pretty hard (down to $7 at one point). I think that they'll do well, as they expand their product line: Video Cards/chipsets, mainboard chipsets, XBox so far. This one breaks the dividend rule, but I bought it on the "buy what you know" strategy, since I like their products, and their support for products.
My other investments are mutual funds, nothing special. (Matter of fact, some of them are DOGS!)

CAVEAT: All of the information posted above is either publically available. Any opinions expressed are personal, and do not reflect any advice or guidance for future performance. (This because of recent memos regarding behaviour around company stock, and internal knowledge of the company. No, I'm not high up enough to have any "insider" info!)

 

[kherman]

This is not a shamelss bump.

I love this one as a long tem hold, but today it hit $30. If you own this stock, etiher do a covered Call (35 call is a recomendation) or sell it and take your profit.

Karl

 

[Placer14]

Alright, help me to understand everything that you guys just discussed there. I read all that before and did a little research but i'm still in the dark about a majority of processes and terminology. You mentioned looking for dividends in company to reduce risk. (Or something to that effect.) How do you figure that, first off...

BTW, I can't seem to see any of the posts on the ATOT Stock group in Yahoo groups. ;-(

 

[kherman]

Originally posted by: Placer14
Alright, help me to understand everything that you guys just discussed there. I read all that before and did a little research but i'm still in the dark about a majority of processes and terminology. You mentioned looking for dividends in company to reduce risk. (Or something to that effect.) How do you figure that, first off...

BTW, I can't seem to see any of the posts on the ATOT Stock group in Yahoo groups. ;-(

I think you've signed up for the "ATIC" correct? The messages should be easily visable when you go to the group's section on yahoo groups. PM me if you are having trouble.

As for the processes and terminology used to discuss dividends, could you quote the post and boldface the confusing portion. I'm having trouble understanding where the confusion was. Don't worry, I'm more than willing to explain it to you.

In general, dividends are a way to measure a company, much in the way people look at sales, cash flow and earnings. Increased dividends are a sign of growth, as are earnings, sales and cash flow.

I used the word hike the dividend. Hike just means the dividend disbursment has increased.
cut = decreased
cancel = dividends no longer being distributed.


Annualized means, given a time period, starting value and finishing value. one can caluclate the annualized gain.

So, if ABC goes up 20% in a 1 year time frame, the annualized gain is 20%.

If ABC goes up 10% in 6 months, the annualized gain is:
(100*(1-(1.10^2)))% = 21%

I should try getting a formula for you, but the idea is that if you have a stock for 10 years, you can calculate how much it went up annually in a manner consistant to show it's compounding rate. (ex: If ABC's value increases by 100% over 10 years, it's annualized gain is not 100/10 or 10%)