Linear Technology Corporation (LLTC)’s Q2 2015 Earnings Conference Call Transcript

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Since extinguishing the debt, we have also increased our quarterly share buybacks. This quarter we bought back 725,000 shares and for the second quarter in a row we have not had an increase in our outstanding shares. Increasing our dividend and our share buybacks will have us distributing roughly the quarterly cash that we generate onshore.

I would now like to open up the conference call to questions to be addressed to either Bob, Lothar or myself.
Question and Answer Session

Operator

And at this time, if you’d like to ask a question, please press star and 1 on your touch tone phone. You may withdraw your question anytime by pressing the pound key. Once again, to ask a question, please press star and 1 on your touch tone phone. Please limit to one question and a follow-up. We will take our first question from Craig Hettenbach. Go ahead, sir.
Craig Hettenbach, Morgan Stanley

Great. Thank you. Questions for Lothar. Although the near-term environment was described as you have a positive bias here, the macro has been a bit choppy by region, so just wanted to get a sense of the implications for your customers in terms of design wins you have and how they see business and ramping those wins, has that had any implications?
Lothar Maier, Chief Executive Officer

Design wins into design sales, now that’s kind of a long multi-year period, so looking at that kind of quarter-to-quarter is a little bit hard to do. I would probably step back a little bit and say just look at the markets that we are focused on — the automotive and industrial markets and the communications markets. Those markets are really the growth drivers for the analog business and we are highly concentrated in those market, so I think better thing to look at is rather than what design wins we got on this quarter is just looking at how we are positioned, the company relative to the markets and what markets are doing well We are about as good aligned as I would say we have ever been.

Craig Hettenbach

Got it, thanks for that. As a follow-up, can you talk about the wireless sensor networks business? I know it is early stages, but just what the customers’ appetite is for those products and any key applications as that business emerges that you would call out?

Lothar Maier

Yes, we did Dust acquisition now almost exactly three years ago and we have seen growth in sales of those initial products every single year, but granted it is on a modest base. About a year-and-a-half ago, we really introduced the first new products post the acquisition and these were the single-chip 5800 series Dust products and those products have been very well received in the market. There is a lot of interest in it. We measured in terms of how many demonstration kits that we give out and how many demos we do. But in terms of it becoming a significant part of our business, we are still looking at a few years for that to happen. But I can tell you the interest is very high. The products are very good and they are really designed specifically towards kind of more industrial applications not consumer applications.

Craig Hettenbach

Got it, thanks for that.

Operator

We will take the next question from William Stein. Go ahead. Your line is open.

William Stein, SunTrust

Great. Thank you for taking my question. I am hoping to dig in the margins a little bit. They came in slightly below consensus and I understand you are adding a bit of capacity. I think in the past, you talked about $400 million per quarter as kind of the as-tooled capacity and then I guess we can do some math around drop through on revenue growth as where we would expect margins to ramp. Can you recalibrate us on that metric? What is your as-tooled capacity today and where do you anticipate margins going longer term?

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