Semiconductors – Broad Line

Analog Devices, Inc.
In March 2017, the company spent almost $16B to acquire Linear Technology. For FY 2017, the purchase decreased net income 5% and tangible book 300%. While it did increase free cash flow by 5%, it also increased debt by 350%, increased goodwill (the amount they overpaid for the asset) by 625% and increased intangibles (the amount above fair value the purchased assets are currently worth) by 850%, which is why tangible book value fell of a cliff and working capital fell by almost 400%. All of these things are just what happens when companies overpay for assets, and I suspect that by this time next year, merging the assets of the two companies will be well underway. But make no mistake, investors may be paying for this investment for quite some time.

Analog Devices, Inc. (NYSE: ADI) – FYE 10/2017 – OVER VALUED – The stock is trading at levels above my current $45 fair value estimate – Please See Linked Worksheet