Texas Instruments' Second-Quarter Forecasts Exceed Estimates

Photographer: Jason Janik/Bloomberg

A detail of a silicon wafer is shown in a clean room at the Texas Instruments semiconductor fabrication plant in Dallas, Texas, U.S., on Tuesday, June 16, 2009. Close

A detail of a silicon wafer is shown in a clean room at the Texas Instruments... Read More

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Photographer: Jason Janik/Bloomberg

A detail of a silicon wafer is shown in a clean room at the Texas Instruments semiconductor fabrication plant in Dallas, Texas, U.S., on Tuesday, June 16, 2009.

Texas Instruments Inc., the second- largest U.S. chipmaker, predicted sales and profit that topped analysts’ estimates, helped by demand for semiconductors used in industrial machinery, phone networks and cars.

Second-quarter profit will be 56 cents to 64 cents a share on sales of at least $3.31 billion, the Dallas-based company said today in a statement. Analysts had predicted a profit of 53 cents a share and revenue of $3.23 billion on average, according to a Bloomberg survey.

Texas Instruments is the biggest producer of analog chips, which go into everything from washing machines to supercomputers, making its earnings a broad indicator of demand for electronics. Last month, the company raised its first- quarter projections, citing a recovery in demand from customers that make industrial machinery.

“The numbers we’re going to see out of them for the rest of the year are probably going to be pretty good,” said Doug Freedman, an analyst at Broadpoint AmTech Inc. in San Francisco. He has a buy rating on the shares, which he doesn’t own. After depleting stockpiles of parts last year, electronics makers are still struggling to get hold of enough inventory, Freedman said.

Texas Instruments rose 19 cents to $27.35 in late trading. The shares, up 52 percent over the past year, advanced 49 cents to $27.16 at 4 p.m. on the New York Stock Exchange.

‘Very Strong Demand’

First-quarter profit rose to $658 million, or 52 cents a share, from $17 million, or 1 cent, a year earlier, the company said in the statement. Sales climbed 54 percent to $3.21 billion.

Analysts had estimated profit of 51 cents a share and sales of $3.14 billion. The company had forecast profit of 48 cents to 52 cents a share on sales of $3.07 billion to $3.19 billion.

The company got “very strong demand” in all of its end markets and regions, Chief Financial Officer Kevin March said in a telephone interview. Texas Instruments has improved its lead times -- the gap between receiving an order and filling it -- without an increase in cancellations, he said. Orders continue to exceed shipments, he said.

“Cancellations remain unchanged and orders picked up even more,” March said.

JPMorgan Chase & Co.’s Chris Danely and other analysts had expressed concern that electronics makers were stockpiling supplies, inflating chip companies’ earnings. Inventory levels for Texas Instruments and its distributors are “very lean,” March said today.

Under Chief Executive Officer Rich Templeton, the company is leaving the market for digital signal processors that manage the radio functions in mobile phones -- an area it once dominated. Qualcomm Inc. now leads in that field.

Texas Instruments is focusing instead on analog chips, where it expects to win more orders and grow faster. The company ranked second to Intel Corp. among U.S. chipmakers in sales last year.

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

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