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Texas Instruments Results, Forecasts Top Estimates

Monday, 23 Apr 2012 05:31 PM

Texas Instruments Inc., the largest maker of analog semiconductors, forecast second-quarter earnings that may top some analysts’ estimates as customers stock up on electronic parts ahead of a projected rise in demand.

Profit will be 30 cents to 38 cents a share on revenue of $3.22 billion to $3.48 billion, the Dallas-based company said Monday in a statement. Analysts on average had predicted earnings of 32 cents on sales of $3.28 billion, according to data compiled by Bloomberg.

Texas Instruments’ analog chips perform electronic functions that range from running car radios to controlling missiles, making the company’s earnings a harbinger of demand in the broader economy. The chipmaker’s orders are increasing across most of its end markets, according to Tore Svanberg, an analyst at Stifel Nicolaus & Co.

“The improvement the company is seeing is fairly broad- based,” said San Francisco-based Svanberg. He recommends buying Texas Instruments stock and owns some of the shares. “Automotive is clearly standing out as an area of strength.”

Texas Instruments rose as much as 4.3 percent in extended trading following the report. Earlier, the shares had fallen 1.8 percent to $31.89 at the close in New York. The stock has climbed 9.6 percent this year.

‘Breadth’ of Orders

“Our business cycle bottomed in the first quarter, and early signs of growth began to emerge,” Texas Instruments Chief Executive Officer Rich Templeton said in the statement. “Particularly encouraging is the breadth of increased orders across geographical regions and markets, including the industrial sector.”

First-quarter net income was $265 million, or 22 cents a share, compared with $666 million, or 55 cents, in the same period a year earlier, the company said. Sales fell 8 percent to $3.12 billion. Analysts had estimated earnings of 17 cents on sales of $3.06 billion.

On March 8, Vice President Ron Slaymaker said Texas Instruments was seeing weaker-than-expected demand for its connectivity products and OMAP, or Open Multimedia Application Platform, processors, which run programs in smartphones and tablets. Some clients were reducing their projections for demand for the devices and cutting inventory, he said on a conference call.

Avnet Inc., Arrow Electronics Inc. and WPG Holdings Ltd., three of Texas Instruments’ largest customers, are all distributors of electronic components. They account for a combined 18 percent of the company’s sales, according to supply- chain data compiled by Bloomberg.

Nokia Oyj is Texas Instruments’ largest customer, according to the Bloomberg supply-chain analysis. Texas Instruments was once the biggest maker of digital signal processors, or DSPs, for mobile phones through its relationship with Nokia. The Finnish phonemaker has decided to diversify by using other suppliers, and Texas Instruments is exiting the baseband DSP business.

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