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Texas Instruments Profit Forecast Matches Estimates

Texas Instruments Profit Forecast Matches Analysts’ Estimate
Texas Instruments is the biggest maker of analog chips, which go into everything from mobile phones to military radar systems, making its earnings a bellwether of demand for electronics and industrial machinery. Photographer: Jason Janik/Bloomberg

Dec. 7 (Bloomberg) -- Texas Instruments Inc., the second-largest U.S. chipmaker, narrowed its fourth-quarter forecast, predicting sales and profit that matched analysts’ projections and citing higher demand for communications equipment.

Fourth-quarter net income will be 61 cents to 65 cents a share on sales of $3.43 billion to $3.57 billion, the Dallas-based company said in a statement today. The midpoints of those ranges line up with analysts’ estimates for profit of 63 cents on sales of $3.5 billion.

Texas Instruments is the biggest maker of analog chips, which go into everything from mobile phones to military radar systems. While demand from computer and television makers was weak, buying of smartphones and communications gear improved, Vice President Ron Slaymaker said on a call. Deutsche Bank AG analysts raised sales and profit predictions after the report.

“Mobile is continuing to hold up pretty well,” said Cody Acree, a Dallas-based analyst at Williams Financial Group. Acree recommends investors buy Texas Instruments shares and said he doesn’t own any of the stock.

On Oct. 25, Texas Instruments predicted profit would be 59 cents to 67 cents a share on sales of $3.36 billion to $3.64 billion. In the year-earlier quarter, the company reported earnings of 52 cents a share on sales of $3 billion.

Texas Instruments was little changed in extended trading after the projections were released. It had risen 46 cents to $33.41 at 4 p.m. on the New York Stock Exchange. The shares have advanced 28 percent this year.

‘Shallow’ Decline

Slaymaker said that while sales are lower sequentially, the decline in chip orders is going to be “shallow.”

Chief Executive Officer Rich Templeton is getting the company out of the market for digital signal processors that manage radio functions in mobile phones -- an area Texas Instruments once dominated. He’s focusing instead on analog chips, where the company expects to win more orders and grow faster, Templeton has said.

After today’s report, Deutsche Bank raised its 2011 sales forecast for Texas Instruments to $14.1 billion, from $13.7 billion, and its per-share earnings forecast to $2.55, from $2.40.

Texas Instruments ranked second to Santa Clara, California-based Intel among U.S. chipmakers in total sales last year.

(Texas Instruments held a conference call to discuss the update. It can be found at {EVTS <GO>}.)

To contact the reporters 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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