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

David Wong

Great. Thanks. Just a push a bit on an earlier question, if your sales were running at what you would consider to be optimal utilization, what gross margins range would be in, and in the long run, what operating margin do you think you get to?

Paul Coghlan

Well, there are so many variables in that other than just getting to 400+ million, but we would think we could get our gross margins towards the high 70 percentage numbers. We have done that in the past so we could probably come close to but maybe not exactly hit our previous high peaks. Then operating margins, if our sales were to grow well on a quarterly basis, so that we get to the 400 and beyond quicker rather than slowly then operating margins could probably get back in the 50% range.

David Wong

Great. Thanks very much.

Operator

We will take our next question from John Pitzer. Go ahead. Your line is open.

Bruce Miller, calling in for John Pitzer, Credit Suisse AG

This is Bruce Miller calling in for John Pitzer. Congrats on the results and thanks for letting me ask you a question. The last time your quarterly revenue was hovering just below $400 million was calendar year 2010 at which point gross margin about 78% and operating margins were in the low to mid 50% range. If I grow revenues evenly over the next couple of quarters, I get revenue back in that range. What margins we expect to those levels? If I assume about 80% incremental gross margin then I get about 76% gross margin. Is this reasonable and the right ballpark?

Paul Coghlan

I think the math you just explained to me quickly, you said if we grow to $4 million, again I don’t how fast you got us there, but you having gross margin at 76% you said.

Bruce Miller

Correct.

Lothar Maier

Which is what the gross margin we had last quarter when we were at $370 million. So my guess is we could do a little better, I mean, we’d have to see how it plays out and what factory efficiencies we are able to achieve but my guess is your 76% might be a little conservative, but not dramatically far off.

Bruce Miller

Okay, thank you.

Lothar Maier

There are high numbers to begin with.

Bruce Miller

Thank you. That was helpful. Then from end market perspective, I was wondering if you could force rank your end-markets in terms of expectations for year-over-year growth for 2015?

Lothar Maier

Well, the one we think there is the most growth probably potentially would automotive, industrial, cars would be second, but there is good innovation going on in other markets as well. We have POE products that are quite attractive and other products that are quite attractive, RF products et cetera, in the communications markets. So those are the three that constitute the lion’s share of our end markets for sure, roughly 90% and we see growth opportunities in all of them but probably automotive would be the fastest growing.

Bruce Miller

Thank you.