Bloomberg News

Texas Instruments Raises Lower End of Sales, Profit Forecasts

March 08, 2013

Texas Instruments Inc. (TXN:US), the largest maker of analog chips, raised the lower end of its forecasts for first-quarter sales and profit, as customers increase orders ahead of a projected rebound in electronics demand.

Earnings will be 28 cents to 32 cents a share on sales of $2.8 billion to $2.91 billion, the Dallas-based company said yesterday in a statement. On Jan. 22, Texas Instruments said profit would be 24 cents to 32 cents on revenue of $2.69 billion to $2.91 billion, and analysts on average predicted 29 cents and $2.81 billion, according to data compiled by Bloomberg.

Texas Instruments has thousands of customers across the electronics industry, from radar-equipment suppliers to microwave-oven makers, meaning its earnings are one of the broadest proxies for the health of the chip market. After running down inventories last year, some companies have resumed buying parts to ensure they aren’t caught short when demand returns, said Tore Svanberg, an analyst at Stifel Nicolaus & Co.

“Order rates are still improving, from obviously a low level,” said Svanberg, who recommends (TXN:US) buying the shares. “The industrial market and especially automotive is showing some strength. We’re still very early in the process.”

Texas Instruments shares (TXN:US), which are up 14 percent this year, rose less than 1 percent to $35.20 at yesterday’s close in New York. Many stocks across the analog-chip industry have gained this year on optimism that orders will pick up starting in the second quarter.

Industrial Applications

“In general, the stronger demand environment has continued,” Texas Instruments Vice President Ron Slaymaker said on a conference call with analysts. “Quarter-to-date orders have been growing strongly.”

While demand remains weak for chips used in personal computers and phone-systems equipment, orders are increasing for chips used in industrial applications, Slaymaker said.

In the first quarter of 2012, profit (TXN:US) was 22 cents a share on sales of $3.12 billion. Texas Instruments is one of the few companies that still give regular midquarter updates on their progress toward earnings targets.

The company increased its quarterly dividend by 33 percent and added $5 billion to its stock-repurchase program last month. Texas Instruments has an indicated dividend yield of 3.2 percent, according to data compiled by Bloomberg, among the highest in the semiconductor industry.

The chipmaker is in the process of exiting the market for digital chips used in smartphones and tablets, and said on Nov. 14 that it would cut 1,700 jobs as part of that shift. The staff reduction was estimated to pare expenses by about $450 million a year by the end of 2013, Texas Instruments said at the time.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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Companies Mentioned

  • TXN
    (Texas Instruments Inc)
    • $49.97 USD
    • 2.44
    • 4.88%
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