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Texas Instruments Predicts Profit That May Beat Estimates

Texas Instruments Inc. (TXN), the largest maker of analog semiconductors, predicted second-quarter profit that may exceed analysts’ estimates as demand increases for chips used in cellular networks.

Net income will be 55 cents to 63 cents a share on sales of $3.14 billion to $3.4 billion, the Dallas-based company said in a statement yesterday. Analysts on average were projecting earnings of 52 cents and revenue of $3.15 billion, according to data compiled by Bloomberg. The shares rose in late trading.

Texas Instruments has products serving thousands of customers in markets from microwaves to military hardware, making its earnings an indicator for demand across the electronics industry. Clients such as Huawei Technologies Co. are building equipment using its chips for new mobile phone networks in China, according to Tristan Gerra, an analyst at Robert W Baird & Co.

“The pace of orders from Huawei picked up from the first quarter,” said Gerra. He has the equivalent of a hold rating on the stock. “Those orders are going to be above expectations.”

Shares of Texas Instruments rose 4.3 percent to $48.47 at the close in New York.

Chief Executive Officer Rich Templeton is seeking to restore sales growth after three consecutive annual declines resulting from the company’s exit from the market for digital modems for mobile phones.

Single Market

Templeton is targeting expansion in analog chips. The semiconductors, which convert physical actions like sound, touch, pressure and temperature into digital signals for devices including TVs, mobile phones and computers, are less costly to develop than digital chips and don’t require the most advanced production techniques.

The company’s greater focus on analog chips has reduced its dependence on any single market such as PCs, which are on course for a third annual contraction.

First-quarter net income was $487 million, or 44 cents a share, compared with $362 million, or 32 cents a share, a year earlier. Revenue rose 3.4 percent to $2.98 billion. Analysts had estimated profit of 41 cents a share on sales of $2.96 billion.

First-quarter results included a gain of $37 million, which was not included in the company’s prior outlook, from the sale of a site and other assets. The gain increased earnings by 2 cents a share.

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

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Ben Livesey, Elizabeth Wollman

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