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Texas Instruments Forecasts Sales That May Beat Estimates

Texas Instruments Forecasts Sales Top Estimates
Texas Instruments Inc. products at a Best Buy Co. Inc. store in Niles, Illinois. Photographer: Tim Boyle/Bloomberg

June 11 (Bloomberg) -- Texas Instruments Inc., the largest maker of analog semiconductors, forecast second-quarter earnings that may top some analysts’ estimates.

Profit will be 32 cents to 36 cents a share on revenue of $3.28 billion to $3.42 billion, the Dallas-based company said today in a statement. Analysts on average had predicted earnings of 34 cents on sales of $3.36 billion, according to data compiled by Bloomberg.

The company’s analog chips perform electronic functions in devices ranging from washing machines to space hardware, making its earnings an indicator of demand across the broader economy. Texas Instruments hasn’t yet felt any slowdown in orders due to worsening economic indicators, said Tore Svanberg, an analyst at Stifel Nicolaus & Co. in San Francisco.

“Bookings were still pretty strong in April and May,” said Svanberg, who recommends buying the shares. “The bigger question for me right now is are we going to get a correction in the second half?”

Texas Instruments shares climbed as high as $28.04 in extended trading following the announcement. They had earlier fallen 3.1 percent to $27.65 at the close in New York. The stock has fallen 5 percent this year. The company will report second-quarter results on July 25.

‘Trending Well’

“Our business is generally tracking well,” Texas Instruments Vice President Ron Slaymaker said on a conference call with analysts. Order are “trending well this quarter and we expect both orders and backlog to grow sequentially.”

The broader industrial market is continuing to recover and an increase in the deployment of mobile-phone base stations in North America is driving demand for communications components, he said. Demand from computer makers “remains mixed.”

While the company’s customers have stopped reducing their stockpiles of unused parts, they are not increasing inventory, Slaymaker said.

Texas Instruments had predicted profit of 30 cents to 38 cents on sales of $3.22 billion to $3.48 billion in April, citing an increase in customer orders for components ahead of a projected pickup in demand.

Avnet Inc., Arrow Electronics Inc. and WPG Holdings Ltd., three of Texas Instruments’ largest customers, are all distributors of electronic components. They account for a combined 20 percent of the company’s sales, according to supply-chain data compiled by Bloomberg.

Nokia Oyj is Texas Instruments’ largest customer, according to the data. Texas Instruments was once the biggest maker of digital signal processors, or DSPs, for mobile phones through its relationship with Nokia. The Finnish phonemaker has decided to diversify by using other suppliers, and Texas Instruments is exiting the baseband DSP business.

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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