Bloomberg News

Texas Instruments Forecasts Top Analysts’ Estimates

April 22, 2013

Texas Instruments Inc. (TXN:US), the largest maker of analog chips, forecast second-quarter sales and profit that may surpass some analysts’ estimates as customers boosted orders ahead of a projected rebound in demand.

Profit in the current period will be 37 cents to 45 cents a share on revenue of $2.93 billion to $3.17 billion, the Dallas- based company said today in a statement. Analysts on average had estimated profit of 38 cents and sales of $3.04 billion, according to data compiled by Bloomberg.

Texas Instruments’ customer (TXN:US) list spans the electronics industry, from aerospace-equipment makers to car-parts suppliers, making its results a harbinger of demand across the chip business. As automakers add more advanced features to vehicles, they’re buying more chips to run them, and some industrial-machine makers are also increasing orders, said Vernon Essi, an analyst at Needham & Co.

“The industrial area has got a lot of good nooks and crannies for them to hide,” said Essi, who has a hold rating (TXN:US) on the company’s stock. “With cars, it’s secular.”

Texas Instruments shares (TXN:US) climbed in extended trading. The stock rose 1.6 percent to $34.81 at the close in New York. Shares have advanced 13 percent this year, compared with a 9.7 percent gain in the Philadelphia Semiconductor Index.

Industrial Applications

In a midquarter update on March 7, Texas Instruments raised the lower end of its first-quarter sales and profit forecasts. At the time, the company said that orders were increasing for chips used in industrial applications, while demand remained weak for chips used in personal computers and phone-systems equipment.

First-quarter net income (TXN:US) rose to $362 million, or 32 cents a share, from $265 million, or 22 cents, in the same period a year earlier. Sales fell 7.6 percent to $2.89 billion. Analysts had estimated a profit of 30 cents on $2.85 billion of revenue, according to data compiled by Bloomberg.

Electronics-parts distributors such as Avnet Inc. (AVT:US) and Arrow Electronics Inc. (ARW:US) are the company’s biggest customers, according to a Bloomberg supply-chain (TXN:US) analysis.

Texas Instruments is in the process of exiting the market for digital chips used in smartphones and tablets, and the company 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)
    • $54.27 USD
    • 0.77
    • 1.42%
  • AVT
    (Avnet Inc)
    • $43.27 USD
    • 0.68
    • 1.57%
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