STOCKREPORTS

Linear Technology Corporation

Nasdaq Symbol LLTC In S&P MidCap 400

Recent Price 53.25 52 Wk Range 54.63 - 23.88

Yield 0.4% 12-Mo. P/E 32.5

Quantitative Evaluation: Outlook (1 Lowest - 5 Highest) 4 Fair Value 62.90 Risk MEDIUM Earn/Div Rank B+
Technical Evaluation: BULLISH since 10/96 Rel. Strength Rank (1 Lowest - 99 Highest) 61 Insider Activity Neutral

Overview 20-MAY-97

LLTC realized solid sequential gains in revenues and EPS in the third quarter of FY 97 (Jun.). The book-to-bill ratio for the quarter was over 1.0, with the recovery spread nicely over all end markets and geographic regions. We believe that this solid base should allow LLTC to realize good growth in FY 98. Revenues should advance about 20% to 25%, in FY 98, as comparisons from the first half of FY 97 will not be difficult. All end markets should continue to contribute favorably, with the best results coming from the communications segment. Gross margins will be pressured by the recent ramping of the company's new fabrication facility in Cadmus, Washington. However, this will be largely offset by the higher sales volume. Increases in operating costs should be in line with sales growth. Results will be aided by higher interest income from the company's healthy cash balances, which currently represent 63% of total assets. After declining slightly to $1.68 in FY 97, the higher sales volume should allow EPS to rise to $2.10 in FY 98.

Valuation 20-MAY-97

The recent improvement in business conditions has been anticipated by the market, so we are maintaining our "hold" recommendation on the shares. While the stock's current P/E of 23X expected FY 98 earnings is low on a historical basis, we don't see the company returning to its pre-FY 97 EPS growth rate of nearly 50% per year. This would tend to lower LLTC's future P/E range from previous levels, and we feel the stock is fairly valued at this time. However, LLTC remains an attractive long-term holding for investors with an above-average tolerance for risk. While EPS growth will be below historical levels, it will remain well above-average.

Key Stock Statistics

Fiscal Year Ending Jun. 30

Business Summary 20-MAY-97

Linear Technology Corporation (LLTC) has grown rapidly in its first fifteen years of existence. LLTC's annual revenues reached $100 million after ten years of operations, and have subsequently grown to over $370 million. The company designs, manufactures and markets a broad line of high-performance standard linear integrated circuits (ICs) that address a wide-range of real-world signal processing applications. Real-world phenomena, such as temperature, pressure, sound, images, speed, acceleration position and rotation are specifically analog in nature, consisting of continuously varying information. Among the advantages offered by operating in the linear as opposed to the digital IC market include smaller capital requirements, greater price stability and market diversity, and less Japanese competition.

LLTC's products are used in a wide variety of applications, including telecommunications, notebook and desk-top PC's, computer peripherals, video/multimedia, cellular telephones, and industrial. The company has expanded its customer base throughout its history. LLTC initially served primarily an industrial customer base, with a high percentage of of revenues going to the military market. During the late 1980's and early 1990's new products fueled substantial growth in the portable computer and hand-held device markets, and telecommunication and networking markets contributed to growth significantly in recent years.

The company's product line includes operational, instrumentation and audio amplifiers; voltage regulators, references, comparators and converters; switched-capacitor filters; communications interface circuits; one-chip data acquisition systems; pulse-width modulators and sample-and-hold devices. About 4,700 finished part types are offered, of which more than 80% are proprietary. About 94% of net sales in FY 96 (Jun.) were of proprietary products.

LLTC is targeting the high-performance segments of the linear circuit market, which is characterized by higher precision, both high power or micropower, higher speed, more subsystem integration on a single chip and many other special features.

The company's wafer fabrication and manufacturing facility is located at its headquarters in Milpitas, CA. A new fabrication facility in Camas, WA, currently under construction, is expected to start product level shipments in early 1997. In October 1994, LLTC brought on line its first assembly plant, located in Peneng, Malaysia.

International sales accounted for 52% of the total in FY 96, versus 49% in FY 95.

Capitalization

Long Term Debt: None (3/97).

Curr. Ratio	4.9	5.7	5.4	5.2	4.0	4.2	4.3	4.1	4.0	5.1
% LT Debt of Cap.	Nil	Nil	Nil	0.2	1.4	6.6	10.5	13.3	12.2	16.0
% Net Inc.of Revs.	35.4	31.9	28.3	24.2	20.9	18.0	14.9	13.8	13.5	9.4
% Ret. on Assets	29.8	26.6	24.3	20.3	17.5	15.4	12.5	11.6	11.2	7.0
% Ret. on Equity	35.7	31.8	29.2	25.3	23.1	21.1	17.8	16.7	16.0	9.6

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--1630 McCarthy Blvd., Milpitas, CA 95035-7417. Tel--(408) 432-1900. Pres & CEO--R. H. Swanson, Jr. VP & COO--C. B. Davies. VP-Fin, CFO & Investor Contact--Paul Coghlan. Secy--A. F. Schneiderman. Dirs--D. S. Lee, L. T. McCarthy, R. M. Moley, R. H. Swanson, Jr., T. S. Volpe. Transfer Agent & Registrar--First National Bank of Boston, Palo Alto, CA. Incorporated--in California in 1981. Empl-- 1,638. S&P Analyst: Stephen T. Madonna, CFA

This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997