THE BUSINESSWEEK 50 RANKINGS + 25

47

Linear Technology

Practically everyone making a new piece of electronic equipment has Linear Technology on speed dial. Linear builds specialized analog chips, which convert real-world signals such as power, temperature, and light into a form that digital chips can process. With such customers as makers of cars, cell phones, and huge telecom switches, Linear has been growing steadily for 25 years. And its margins, about 40%, are twice those of many rivals. That’s largely because of Linear’s moves to pioneer new markets when prices begin to commoditize. CEO Lothar Maier continues to follow that blueprint. Linear is focusing on such emerging markets as power-over-Ethernet chips that would let Net-based phones get juice right through the phone cable. While the company was caught in a fourth-quarter chip slowdown and has been mentioned in the options backdating scandal, neither problem should knock steady Linear off course for long.

Overall Grade

A-

Market Data

LLTC

Market Value
(2/28/2007)

$9.9 Billion

Profitability*

27.9%

B+

Sales Growth Rate**

17.9%

B-

12-Month Sales

$1.1 Billion

12-Month Net Income

$0.4 Billion

Total Return Past 12 Months

-8.2%

Past 36 Months

-13.6%

Economic SectorInformation Technology
IndustrySemiconductors
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.
$FOOTNOTE

Lothar Maier

Lothar Maier, 51

CEO since 2005


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Data as of 2/28/07 provided by Standard & Poor's Compustat