Texas Instruments Inc. (TXN: Quote), the world's largest maker of analog chips, said Monday after the markets closed that its second quarter profit fell 34% 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.
At the same time, the company forecast third quarter revenue and earnings below analysts' current consensus estimates.
"Although we believe customers and distributors have low inventory levels, the global economic environment is causing both to become increasingly cautious in placing new orders. Our backlog grew last quarter but orders slowed in the month of June and our backlog coverage for September is lower than normal. As a result of this increased uncertainty, we currently estimate that our revenue in the third quarter will be about even with last quarter and below our seasonal average growth rate," said Rich Templeton, TI's chairman, president and CEO.
TI shares are currently losing 1.01% in after hours trading after closing the day's regular trading session at $26.82, down 43 cents or 1.58%. The shares trade in a 52-week range of $24.34 to $34.24.
TI makes chips used in phones, telecommunications equipments and calculators, making the company's earnings an indicator of demand across the economy.
Second quarter analog revenue rose 13% year-over-year to $1.8 billion, due to the inclusion of Silicon Valley Analog revenue. Revenue from high performance analog and high volume analog & logic declined while revenue from power management was about even.
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 15% from a year earlier to $509 million, due to lower revenue from products sold into communications infrastructure applications as well as lower revenue from catalog products.
Second quarter Wireless revenue dropped 39% from last year to $342 million, mainly due to lower revenue from baseband products.
Other revenue for the quarter declined 4% year-over-year to $684 million, due to the expiration of transitional supply agreements associated with previously acquired factories.
The company's orders for the second quarter totaled $3.41 billion, down 5% from the year-ago quarter but up 5% from the prior quarter.
The company's inventory at the end of the quarter was $1.88 billion, an increase of $123 million from a year earlier and $32 million from the previous quarter.
For the second quarter ended June 30, 2012, TI reported net income of $446 million or $0.38 per share, compared to $672 million or $0.56 per share for the year-ago quarter.
The latest quarter results includes $0.06 of charges associated with the company's $6.5 billion acquisition of National Semiconductor, which was completed in September 2011, and restructuring.
On average, 32 analysts polled by Thomson Reuters expected the company to earn $0.41 per share for the second 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 second quarter shrank to 49.5% from 50.7% a year earlier, while operating margin declined to 17.9% from 26.2% last year.
Revenue for the second quarter fell 4% to $3.34 billion from $3.46 billion in the same quarter last year. Second quarter revenue grew 7% sequentially. Thirty-eight analysts had a consensus revenue estimate of $3.35 billion for the second quarter.
In its mid-quarter update last month, TI had narrowed its second quarter revenue guidance to a range of $3.28 billion to $3.42 billion from its prior guidance of $3.22 billion to $3.48 billion, and earnings guidance to a range of $0.32 to $0.36 per share from its previous guidance of $0.30 to $0.38 per share.
The company repurchased 9.6 million shares of its common stock during the second quarter for $300 million.
Looking forward to the third quarter, the company forecast revenue of $3.21 billion to $3.47 billion and earnings of $0.34 to $0.42 per share. The company said the third quarter earnings per share will be impacted by about $0.07 per share from acquisition and restructuring charges.
Analysts currently expect the company to earn $0.50 per share on revenue of $4.54 billion for the third quarter.
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by RTT Staff Writer
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