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Texas Instruments Forecasts Miss Analysts’ Estimates

Texas Instruments Forecasts Sales, Profit That May Top Estimates
Second-quarter net income rose 48 percent to $660 million, or 58 cents a share, from $446 million, or 38 cents, a year earlier, the company said. Photographer: Daniel Acker/Bloomberg

Texas Instruments Inc., the largest analog-chip maker, forecast third-quarter sales and profit that may exceed analysts’ estimates as demand from the automotive and industrial markets helps counter a personal-computer slump.

Revenue will be $3.09 billion to $3.35 billion, the Dallas-based company said yesterday in a statement. On average, analysts had projected sales of $3.2 billion, according to data compiled by Bloomberg. Earnings will be 49 cents to 57 cents a share, compared with estimates for 51 cents.

Texas Instruments, whose chips convert touch and sound into electronic signals, is benefiting as makers of industrial equipment, cars and mobile-phone systems order more parts, Chief Financial Officer Kevin March said. That improvement in demand is buoying the company’s results even as PC sales continue their longest slump on record.

“Other than PCs, we’re generally expecting most of those markets to show growth,” March said in a telephone interview. “Automotive and industrial will continue to grow and we saw late signs of communications-infrastructure beginning to pick up. We expect that to continue.”

Texas Instruments shares rose 5 percent to $39.30 at 10:07 a.m. New York, and earlier touched $39.74 for the biggest intraday gain since June 2012. The stock had advanced 21 percent this year through yesterday, compared with a 26 percent increase in the Philadelphia Semiconductor Index.

Second Quarter

Second-quarter net income rose 48 percent to $660 million, or 58 cents a share, from $446 million, or 38 cents, a year earlier, the company said. In the recent quarter, earnings included a gain of 16 cents related to the transfer of technology to a customer. Excluding the gain, profit would have been 42 cents, compared with the average analyst prediction for 41 cents. Revenue fell 8.6 percent to $3.05 billion. Analysts had estimated sales of $3.06 billion.

“It appears the company is executing well,” said Bill Kreher, an analyst at Edward Jones & Co. He has a hold rating on the shares. “Industrial and automotive markets remain healthy.”

Texas Instruments’ product range spans almost every market that relies on semiconductors, from chips for electronic cash registers to missile-guidance-system components, making its earnings a closely watched indicator of demand across the electronics industry.

Car Market

In the automotive market, the company’s chips do everything from controlling in-dash entertainment and navigation systems to processing the signals from rear-view cameras. Texas Instruments got 35 percent of its revenue from the automotive and industrial markets in the first half of 2013, Vice President Ron Slaymaker said on a conference call yesterday.

Under Chief Executive Officer Richard Templeton, Texas Instruments is exiting the market for digital chips used in smartphones and tablets. Cutting that division has been reducing total sales since last year.

While the shift has lessened the company’s dependence on the mobile-device market, Texas Instruments still supplies cheaper components such as power-regulation chips and audio processors for phones. Its products are also used as power regulators in PCs.

Global PC shipments fell 10.9 percent to 76 million units in the second quarter, the fifth consecutive drop, market researcher Gartner Inc. said earlier this month. Unit sales slid from a year earlier in all regions, including a 1.4 percent decline in the U.S.

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