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Texas Instruments Profit Drops 60%


Texas Instruments Inc. (TXN), the world's largest maker of analog chips, said Monday after the markets closed that its first quarter profit dropped 60% from last year, hurt by weaker demand, costs associated the company's acquisition of smaller rival National Semiconductor Corp. and restructuring charges related to the planned closures of 2 older plants.

However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.

Looking forward to the second quarter, the company forecast earnings in line with analysts' current consensus estimate, but gave a slightly upbeat revenue outlook.

"As we expected, our business cycle bottomed in the first quarter, and early signs of growth began to emerge," said Rich Templeton, TI's chairman, president and CEO. "Orders were up 13 percent, and backlog is growing again. Particularly encouraging is the breadth of increased orders across geographical regions and markets, including the industrial sector."

TI shares are currently gaining 4.01% in after hours trading after closing the day's regular trading session at $31.89, down 58 cents or 1.79%. The shares trade in a 52-week range of $24.34 to $35.98.

Dallas, Texas-based TI makes chips used in phones, telecommunications equipments and calculators.

First quarter analog revenue rose 10% year-over-year to $1.7 billion, due to the inclusion of Silicon Valley Analog revenue. Revenue from High Performance Analog, High Volume Analog & Logic and Power Management declined.

TI closed its acquisition of National Semiconductor on September 23, and from that date began to consolidate the results of the acquired operations into its Analog segment under the name Silicon Valley Analog.

Embedded Processing revenue for the quarter fell 11% from a year earlier to $473 million, mainly due to lower revenue from products sold into communications infrastructure applications as well as lower revenue from catalog products.

First quarter Wireless revenue dropped 43% from last year to $373 million, mainly due to lower revenue from baseband products.

Other revenue for the quarter declined 11% year-over-year to $589 million, due to lower demand for DLP products and expiration of transitional supply agreements.

The company's orders for the first quarter totaled $3.24 billion, down 9% from the year-ago quarter but up 13% from the prior quarter.

The company's inventory at the end of the quarter was $1.85 billion, an increase of $175 million from a year earlier and $65 million from the previous quarter.

For the first quarter ended March 31, 2012, TI reported net income of $265 million or $0.22 per share, compared to $666 million or $0.55 per share for the year-ago quarter.

The latest quarter results includes $0.10 of charges associated with the company's $6.5 billion acquisition of National Semiconductor, which was completed in September 2011, and restructuring.

On average, 28 analysts polled by First Call / Thomson Financial expected the company to earn $0.29 per share for the first quarter. Analysts' estimates typically exclude special items.

The company announced in January that it planned to close two older semiconductor manufacturing plants in Hiji, Japan, and Houston, Texas, over the course of the next 18 months.

Gross margin for the first quarter fell to 49.1% from 50.9% a year earlier, while operating margin declined to 12.7% from 26.8% last year.

Revenue for the first quarter fell 8% to $3.12 billion from $3.39 billion in the same quarter last year. Thirty-seven analysts had a consensus revenue estimate of $3.06 billion for the first quarter.

Revenue in the latest quarter includes insurance proceeds of about $65 million related to interruption of TI's business operations as a result of the 2011 Japan earthquake.

In its mid-quarter update last month, TI had slashed its first quarter revenue guidance to a range of $2.99 billion to $3.11 billion from its prior guidance of $3.02 billion to $3.28 billion, and earnings guidance to a range of $0.15 to $0.19 per share from its previous guidance of $0.16 to $0.24 per share.

During the first quarter, the company repurchased 9.1 million shares of its common stock for $300 million.

For the second quarter, TI forecasts revenue of $3.22 billion to $3.48 billion and earnings of $0.30 to $0.38 per share, which includes about $0.06 per share in acquisition and restructuring charges. Analysts currently expect the company to earn $0.40 per share on revenue of $3.29 billion for the second quarter.

by RTTNews Staff Writer

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