Texas Instruments Predicts Profit Above Analysts’ Estimates

  • Company points toward demand in autos, industrial equipment
  • Fourth-quarter revenue gained 7% from a year earlier

Texas Instruments Inc., the largest maker of analog semiconductors, forecast first-quarter revenue and profit that may top projections, indicating stronger demand from makers of industrial equipment.

Key Points

  • First-quarter profit will be 78 cents to 88 cents a share, the Dallas-based company said Tuesday in a statement. Revenue will be $3.17 billion to $3.43 billion.
  • The forecast compares with analysts’ average estimates of 75 cents a share on sales of $3.2 billion, according to data compiled by Bloomberg.
  • Texas Instruments’ fourth-quarter net income climbed to $1 billion, or $1.02 a share, from $836 million, or 80 cents a share, a year earlier.
  • Sales rose 7 percent to $3.4 billion.
  • Shares declined less than 1 percent in extended trading, in part because investors may be looking for even more robust growth, said Tore Svanberg, an analyst at Stifel Nicolaus & Co.

The Big Picture

Texas Instruments has tens of thousands products that are part of virtually every device that has an on-off switch. Its customer list ranges from makers of space hardware to heavy-duty industrial equipment and consumer electronics. That reach makes the company’s earnings and outlook a bellwether for demand across the electronics industry.

CFO Commentary

  • The chipmaker is getting stronger demand from carmakers and orders for parts used in industrial equipment have also improved, Chief Financial Officer Kevin March said in an interview.
  • “Overall personal electronics, while it’s still a little bit weak, it’s not as weak as it has been,” March said.
  • “We’re seeing continued strength in automotive. Our products are very successful in those applications,” he said. “We’re also seeing the resumption of strength that we saw in industrial in the last quarter continuing into this quarter.”

Market Reaction

  • “Most people were certainly expecting a beat and raise, and that’s what we got,” Svanberg said. “I can’t see anything that would represent a red flag. They kind of beat numbers across the board.”
  • Svanberg, who has a hold rating on the stock, said some investors may now start to demand that the company add more revenue growth to the improvements in profitability it has already made.

The Details

  • Brian Crutcher was promoted to chief operating officer, Texas Instruments said. The 44-year-old has worked at the company for 21 years and has been head of sales and global operations. He is adding oversight of technology development and manufacturing to his current duties, the company said.
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