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Texas Instruments Profit Up 11 Percent
(AP) Texas Instruments (News - Alert) Profit Up 11 Percent
By PAUL J. WEBER
Associated Press Writer
DALLAS
Texas Instruments Inc., the largest maker of chips used in wireless phones, said Monday that its third-quarter earnings rose 11 percent as demand for analog chips and lower manufacturing costs overcame a drop in revenue.
In the third quarter, net income rose to $776 million, or 54 cents per share, from $702 million, or 46 cents per share, in the year-earlier period.
The latest quarter included a previously disclosed gain of 2 cents per share from the sale of a business unit.
The results surpassed estimates on Wall Street, where analysts expected profit of 50 cents per share, according to Thomson (News - Alert) Financial.
Texas Instruments, which makes chips used in more than half the world's cell phones, said the company is seeing strong growth in the analog market. Analog chips are used in a variety of electronic devices, included cell phones and digital music players.
"Analog is increasingly shaping our financial performance," said Ron Slaymaker, TI's vice president of investor relations.
Revenue fell 3 percent to $3.66 billion from $3.76 billion a year ago, in line with Wall Street expectations. The company said the year-ago figure was bolstered by customers' boosting inventory.
Looking ahead, TI issued a fourth-quarter revenue target that is lower than the average analyst estimate. The company expects revenue between $3.40 billion and $3.68 billion in revenue, while Wall Street projects $3.72 billion. The company projects profit of 48 cents to 54 cents per share, compared with Wall Street's average estimate of 50 cents for the quarter.
Slaymaker said the reason for the lighter revenue projection comes down to wireless. He said that while the industry overall has been strong, the company expects customers for its wireless chips to pull back on demand in December once they complete their holiday build. That was the pattern the company experienced a year ago, he said.
Slaymaker said TI is also seeing some impact from Ericsson (News - Alert) bringing on an additional supplier, costing TI some market share.
Cody Acree, an analyst with Stifel, Nicolaus & Co., gave TI a "mixed" review, saying that while the company was in line for the quarter, its outlook was cautious.
"We definitely respect their view and their prudence, but it may paint a picture of weakness in the wireless market that is yet unknown," Acree said. "We'll have to see how the consumer demand shakes out during the holidays."
In electronic aftermarket trading, TI shares added 28 cents to $34.55 after closing Monday up 35 cents to $34.27.
TI also announced Monday that it would cut about 300 manufacturing jobs from its facility in Tucson, Ariz., while keeping about 300 engineering jobs there. About 200 of the manufacturing jobs would be moved to the company's facility in Sherman, about 65 miles north of the company's headquarters.
The transition will take two years and result in a restructuring charge of about $35 million, with the company expecting to save $20 million when the transition is complete. The company said the move was made to more effectively use manufacturing capacity.
Last month, TI detailed plans to lay off 191 workers whose manufacturing jobs in Dallas are being eliminated and who couldn't find other positions at the semiconductor company.
The layoffs will begin in early November and continue until the end of January, the Dallas-based company has said. The workers will be put on paid leave for 60 days after their release.
Texas Instruments is also finishing the last of 233 layoffs from two other facilities in Dallas by year end.
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