June 8 (Bloomberg) -- Texas Instruments Inc., the second-biggest U.S. chipmaker, said sales and profit will be at the upper end of earlier targets, buoyed by demand for industrial machinery.
Second-quarter profit will be 60 cents to 64 cents on sales of at least $3.45 billion, the Dallas-based company said today in a statement. That compares with April predictions of 56 cents to 64 cents a share on revenue of at least $3.31 billion.
Texas Instruments is the biggest producer of analog chips, which go into everything from automobiles to digital cameras, making its earnings an indicator of demand for electronics. The company has struggled to keep up with orders, limiting its ability to increase earnings. It’s now better able to boost output, said Tristan Gerra, an analyst for Robert W. Baird & Co.
“For the first time in several quarters, they’ve been able to address their supply issues,” said the Milwaukee-based analyst, who has an outperform rating on the stock and doesn’t own it. “There is a catch-up effect from the first quarter.”
Analysts had estimated second-quarter profit of 61 cents a share and revenue of $3.47 billion on average, according to a Bloomberg survey.
Texas Instruments rose 8 cents to $23.97 in extended trading after the report. The shares, down 8.3 percent this year, closed at $23.89 on the New York Stock Exchange.
“We are seeing some pretty broad-based strength,” Vice President Ron Slaymaker said on a conference call. He downplayed concerns that European demand is slowing, saying that orders there are keeping pace with other regions. Sales from industrial companies grew faster than those from other sectors, he said.
While lead times -- the time between receiving orders and fulfilling them -- are shortening, that’s due to an increase in output, not weakening demand, Slaymaker said.
Under Chief Executive Officer Rich Templeton, the company is exiting 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.
Sales in that market will be little changed from the first quarter, Slaymaker said. Total sales of wireless chips will rise, lifted by demand for applications processors -- the chips that power operating systems in phones.
Texas Instruments is focusing more 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 total sales last year.
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