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(Revised from original 2003 version)
Dividend Policy at Linear Technology
In 1992, Linear Technology, a designer and manufacturer of analog semiconductors, initiated a dividend. The firm increased its dividend by approximately $0.01 per share each year thereafter. In fiscal year 2002, Linear experienced its first significant drop in sales since its 1986 initial public offering. Sales dropped by 47%, and profits fell by 54%. In the spring of 2003, CFO Paul Coghlan is deciding whether to recommend yet another increase in dividends to lift Linear's payout ratio to 33.1%, high by the standards of technology firms.
Keywords: Financial Strategy;
Initial Public Offering;
Baker, Malcolm P., and Alison Berkley Wagonfeld. "Dividend Policy at Linear Technology." Harvard Business School Case 204-066, February 2004. (Revised from original October 2003 version.)