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Analog Devices Inc.'s (ADI) fiscal second-quarter profit dropped 61% on lower sales and restructuring charges.

Shares jumped 6.9% to $22 in after-hours trading from the close of $20.58 as the results topped Wall Street's expectations and the semiconductor company forecast fiscal third-quarter results above analysts' estimates.

The company said orders recovered significantly in the latest quarter and stayed at that level in the first two weeks of May.

"ADI's second-quarter results were better than planned as we benefited from increased sales to communications infrastructure and consumer customers and a general abatement of inventory reductions by our customers," said Chief Executive Jerald Fishman.

He added expenses were significantly lower than planned because of aggressive cost cuts.

Last month, an Analog Devices executive said the chip industry was likely to recover in the first half of this year. The company has been unloading its computing and wireless handset businesses to focus on its core signal-processing technologies and streamlining its manufacturing operations.

For the quarter ended May 2, the company reported profit of $51.8 million, or 18 cents a share, from $133.1 million, or 45 cents a share, a year earlier.

The latest results included $12 million, or 3 cents a share, in restructuring costs. Excluding items, earnings from continuing operations fell to 21 cents a share from 44 cents.

Revenue dropped 27% to $474.7 million.

In February, the maker of chips used in cellphones, telecom base stations, medical devices and flat-screen TVs predicted earnings from continuing operations of 8 cents to 9 cents a share and a 5% to 15% sequential decline in revenue, resulting in a range of $405.1 million to $452.8 million, slightly below analysts' then-expectations.

Gross margin fell to 55.1% from 61%, because of lower manufacturing utilization and the mix of products sold. Still, the figure came in above the company's guidance of 53% to 54%.

Inventory slid 4.6% from a year earlier.

Operating expenses fell 18% from the fiscal first quarter, above Analog Devices' prediction of a 3% to 4% sequential drop, and 15% from a year earlier.

New orders exceeded shipments, resulting in a book-to-bill ratio above 1 and implying a positive business outlook, for the first time since the third quarter of 2008. The fiscal third-quarter opening backlog also rose sequentially.

Industrial revenue, which is about half of the company's total, declined 31%. Revenue in the low-margin consumer business decreased 36%, while communications revenue slid 6.6% and computer revenue fell 44%.

Among Analog Devices' products, analog products revenue dropped 26% and accounted for 86% of total revenue. The company expects to benefit from the growing market for "smart" electricity meters.

Analog Devices expects fiscal third-quarter earnings of 17 cents to 19 cents a share on revenue flat with the second quarter. Analysts estimated earnings of 11 cents a share on revenue of $441.8 million, according to a poll by Thomson Reuters.

Analog Devices' stock has lost nearly a quarter of its value since September.

-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975; Kathy.Shwiff@dowjones.com