Texas Instruments Has Strong Third Quarter, Forecast in Line

  • Company cites order gains in mediocre economy for performance
  • CFO says outperformance due to investment in auto, industrial

Texas Instruments Inc., the largest maker of analog semiconductors, reported third-quarter sales and profit that beat analysts’ estimates on strong demand for chips used in cars and industrial equipment. Its projection for revenue in the current quarter, however, was less than some analysts forecast.

Key Points

  • Fourth-quarter net income will be 76 cents to 86 cents a share, the Dallas-based company said in a statement Wednesday. Revenue will be $3.17 billion to $3.43 billion.
  • The forecast compares with analyst’s average estimates of 79 cents a share on sales of $3.3 billion, according to data compiled by Bloomberg.
  • Texas Instruments’ third-quarter net income was $968 million, or 94 cents a share, compared with $798 million, or 76 cents a share, a year earlier.
  • Sales rose 7 percent to $3.7 billion.

The Big Picture

The breadth of Texas Instruments’ product offerings and its customer list make it a proxy for demand across the electronics industry. That lack of concentration in any one area has insulated the chipmaker from fluctuations in demand in an individual market or for a specific customer. While that has helped the company’s ability to generate cash and increase returns to investors, sales growth had slowed.

CFO Interview

  • The company’s investments in products for the automotive and industrial markets are helping it win orders, said Chief Financial Officer Kevin March.
  • In the third quarter, sales in automotive, industrial, personal electronics and communications infrastructure were stronger than anticipated, he said.
  • “We’ve talked about being in a pretty mediocre economy for a while and we’re going to continue to be in that for quite a while,” March said in a telephone interview. “We’re seeing a resumption of growth but it’s more in line with a pretty slow growing economy.”

The Details

  • Texas Instruments stock was unchanged in extended trading following the announcement.
  • While it has diversified, the company’s biggest customer Apple Inc. provided Texas Instruments with more than 10 percent of sales last year, exposing the company’s earnings to fluctuations in sales of the iPhone.
  • The chipmaker raised its regular quarterly dividend to 50 cents a share, an increase of 32 percent.
  • The move, larger than previous raises, shows the company’s commitment to return cash to shareholders and to balance the amount given in the form of dividends against the amount it spends on stock repurchases, March said.


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