Linear Dividend

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REV: FEBRUARY 11, 2004


Dividend Policy at Linear Technology
It was April 2003 and Paul Coghlan was pulling together his notes for Linear Technology’s board meeting the following day. As chief financial officer of the Silicon Valley semiconductor company,
Coghlan was responsible for making a recommendation about whether or not Linear should increase its dividend this quarter. Coghlan and Linear’s CEO Robert Swanson were pleased with the company’s third-quarter financials for fiscal year 2003, but sales and net income still remained substantially below Linear’s record levels set in 2001. In addition, the technology industry was still emerging from a recessionary environment
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In addition, analog fabs could be used for 10-plus years, while digital fabs often become obsolete within three to five years.1
Research and development expenses were also modest, peaking at $102 million in fiscal year (FY)
2001. Within the analog segment of the industry, Linear competed with Maxim, Analog Devices, and

1 Goldman Sachs, “Technology: Semiconductors,” February 21, 2003, p. 91.

Professor Malcolm P. Baker and Alison Berkley Wagonfeld, Executive Director of the HBS California Research Center, prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
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