Linear Technology (LLTC)

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Linear is a high performance analog semiconductor company. Its products are instrumental in converting digital streams to analog waves. People experience the world in analog waves (e.g. sound and light) and not in digital. So the digital revolution thereby increases the need to high performance analog conversion.

Something that makes LLTC different is that most of the sales force are actually engineers- there are fewer analog engineers than digital engineers. So when they meet with a customer, the sales person can actually aid the process of creating a solution. A colorful anecdote occurred in the making of a camera that takes pictures, a feature that took a long time to come to fruition. The linear salesman was flying back from the meeting and trying to fall asleep but his mind was wondering about how to create a camera flash that could work with a cell phone. With eyes closed the plane passed through a series of clouds creating a strobe like flicker behind his eyelids. It was a eureka moment. When the plane landed, he had already worked up how to substitute a strobe light for a typical camera flash, and the camera phone came to life.

Sales are spread throughout the following industries:

Industrial 33%
Communications 33% (8% handsets, 10% base stations, 15% networking) 
Computer 13%
Automotive 8% 
High end consumer 9%
Military 4%

Military used to be a much higher percentage but opportunities to enrich features in other areas created significant growth.

Automobiles are of particular challenge. Most electronics work well when temperatures are steady, the machine is not bumped around, and there is no surge in electrical supply. None of these conditions exist in an automobile. Linear's products are used for items such as: LED backlighting, adaptive cruise control, electronic steering and breaking, and hybrid car batteries. Cars are becoming electronic feature rich and it has been estimated that 40% of the cost of a car in 2010 will be for electronics.

Linear avoids making products that are commodities, and their gross margins are more like a software company than a semiconductor company.

The founder of the company, Mr. Swanson, stepped down as CEO in January of 2005 but continues to serve as Executive Chairman.

The company announced in Mid 2007, the authorization to repurchase $3 billion (approximately 30%) of the outstanding shares.

Linear Technology's competitors include: Maxim, Texas Instruments and National Semiconductor.

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