Texas Instruments Forecasts Profit That May Top Estimates

Texas Instruments Inc., (TXN) the biggest maker of analog semiconductors, forecast third-quarter profit that may top analysts’ estimates on demand for chips used in industrial machinery, cars and mobile-phone systems.

Net income will be 66 cents to 76 cents a share on sales of $3.31 billion to $3.59 billion, the Dallas-based company said in a statement yesterday. That compares with average analysts’ estimates for earnings of 68 cents on revenue of $3.43 billion.

Texas Instruments, with one of the broadest product lines in the semiconductor industry, benefits when demand rises for equipment ranging from space hardware to home appliances. Also fueling growth is an increase in orders from companies that make base stations for wireless networks, helping push sales up 8 percent in the second quarter, Chief Financial Officer Kevin March said.

“We had been seeing automotive and industrial being very strong, but what entered the fray this quarter was communications infrastructure being very strong,” March said in a phone interview. “The underlying economy is doing OK. It’s not doing great, but it’s not doing terrible either.”

Second-quarter net income rose 3.5 percent to $683 million, or 62 cents a share, from $660 million, or 58 cents, a year earlier, the company said. Revenue climbed to $3.29 billion. Analysts had estimated earnings of 59 cents on sales of $3.27 billion.

Texas Instruments shares were little changed in extended trading following the report. The stock had gained 0.7 percent to $49.17 at yesterday’s close in New York, and has climbed 32 percent in the past year.

Economic Recovery

“The company’s benefiting from a macroeconomic recovery,” said Bill Kreher, an analyst at Edward Jones & Co. who has a hold rating on the stock. “It looks like the Street was hoping for maybe a little bit more in terms of outlook.”

Chief Executive Officer Rich Templeton is seeking to restore sales growth after three consecutive annual declines, a result of the company’s exit from the market for digital-modem chips for mobile phones.

Texas Instruments is trying to expand its share of the analog-semiconductor market, which was 15 percent in 2013, according to researcher IHS Technology. Its nearest rival is Qualcomm Inc. (QCOM), which had an 8.4 percent share. Analog chips convert physical data like sound, touch, pressure and temperature into digital signals for devices including mobile phones, cars and factory machinery.

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 Jillian Ward, Reed Stevenson

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.