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The global economic slowdown scored another hit on a solid U.S. company. This time around, it's analog semiconductor leader Linear Technology (Nasdaq:LLTC) announcing that the global credit crisis and macro slowdown is going to start hitting performance in a serious way. Interestingly, however, Linear's guidance is singularly weak among the semiconductor players (for now, at least), so it makes one wonder who really has the right read on the pulse of semiconductor demand.

Another Clockwork Performance...
On Tuesday, this diversified analog chip maker reported its fiscal first quarter results, with revenue growing 10% over last year (about 1% sequentially), gross margins declining ever so slightly (but still at an eye-popping 77%), and operating income also rising about 10% from last year's level.

...Clockwork Orange, That Is
Unfortunately, that's pretty much where the good news ends. This was another more or less ho-hum Linear Tech quarter ... and then guidance came. The company projected that revenue in the next quarter (the calendar fourth quarter, their fiscal second quarter) was likely to drop between 10% and 20%.

Now, that sounds bad enough in its own right, but when you compare it to the guidance from fellow chip companies like Intel (Nasdaq:INTC) (generally up single-digits), Altera (Nasdaq:ALTR) (down about 1%), or even Maxim (Nasdaq:MXIM) (down about 5%), that looks like a real curveball. Even National Semi (NYSE:NSM), arguably a better or closer comparable to Linear, is looking for some growth in the next quarter, even though bookings were a little sluggish.

The specifics of what management said about the outlook are very interesting. Apparently the quarter was tracking along nicely, Linear had a positive book-to-bill through early September, and then orders just fell off a cliff. Management went on to say that the forecast is entirely "macro-based" (that is, they don't believe they are losing share) and that their feedback from their sales force suggests guidance in the negative 10% range (so management is being more conservative).

What's the Real Story?
Does this report mean that Linear is the canary in the coal mine, seeing a downturn in the chip sector before the rivals? Is this a testament to management's conservatism and forecasting ability? Or has the company lost share with big accounts like Apple (Nasdaq:AAPL) and Cisco (Nasdaq:CSCO) and management is spinning the news?

Frankly, with this company's history, I'm entirely inclined to believe management and take the position that Linear is simply seeing the sector downturn before everybody else. But there's also a way to find out without waiting too long.

I would suggest that investors with a keen interest in the semiconductor space pay extra attention to the upcoming earnings report from Taiwan Semiconductor (NYSE:TSM). Many semiconductor companies use third-party foundries like Taiwan Semiconductor, and the utilization rate and forward guidance should tell us more about whether this is Linear-specific, or whether company management just happened to see the tidal wave coming a little earlier than others.

What to do While you Wait
With broad exposure to a wide set of industries (about one-third industrial, and one-fifth communications), Linear isn't going to dodge a downturn in the economy. What's more I think the crunch is coming. Even if company management is wrong about it coming soon, it's still coming. That doesn't make a compelling case for stepping up today and buying shares.

By the same token, we all know that the best bargains are found when Wall Street analysts are turning their ties into headbands and tourniquets and re-enacting "Lord of the Flies" in their offices. To that end, these shares haven't been at this level since 2002 and the common valuation metrics haven't been this low in at least a decade. To me, that means value-oriented investors looking for some tech exposure should at least take a look at Linear, curve-balls or not.

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