Texas Instruments Forecasts Top Analysts’ Estimates

Texas Instruments Inc. (TXN), the largest maker of analog chips, forecast second-quarter sales and profit that may top some analysts’ estimates, helped by increased orders from makers of automotive and industrial-machine parts.

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 yesterday 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 is receiving more orders from industrial- tool and auto-components makers, helping to make up for slowing demand for personal-computer parts and communications infrastructure, Chief Financial Officer Kevin March said. The company’s customer list ranges from aerospace-equipment builders to car-parts suppliers, making its results a harbinger of demand across the chip business.

“We saw strength in the industrial and automotive sectors,” March said in an interview. “Customers continue to operate with very lean levels of inventory. We built order backlog in the first quarter for the first time in a couple of quarters.”

Texas Instruments shares 2.2 percent to $35.59 at 9:34 a.m. in New York. The shares had advanced 13 percent this year through yesterday, compared with a 9.7 percent gain in the Philadelphia Semiconductor Index.

First Quarter

First-quarter net income rose 37 percent to $362 million, or 32 cents a share, from $265 million, or 22 cents, in the same period a year earlier, Texas Instruments said. 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.

Industrial-equipment makers in the U.S. and China provided Texas Instruments with its strongest orders in that business, Vice President Ron Slaymaker said on a conference call. Europe and Japan lagged behind. In automotive, U.S. customers ordered the most, he said.

“Right now the markets are growing, but they’re growing slowly and are very patchy,” said Cody Acree, an analyst at Williams Financial Group. He recommends buying Texas Instruments stock. “We’re not there yet.”

PC Components

Demand for PC components was the weakest area of the computing division, Slaymaker said. Earlier this month, market- research firm IDC said PC shipments fell 14 percent in the three months that ended in March -- the steepest quarterly drop on record.

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