Texas Instruments Inc. (TXN: Quote), the world's largest maker of analog chips, said Monday after the markets closed that its third quarter profit rose 30% from last year, as the benefit from a change in a Japanese pension program and lower acquisition charges more than offset lower revenue and higher operating expenses.
The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue.
However, the company forecast fourth quarter revenue and earnings well below analysts' current consensus estimates.
"TI revenue grew sequentially and operations were well executed even though the economy and semiconductor market remained weak and likely will get weaker in the fourth quarter," said Rich Templeton, TI's chairman, president and CEO.
TI shares are currently losing 0.32% in after hours trading after closing the day's regular trading session at $27.79, down 2 cents. The shares trade in a 52-week range of $26.06 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.
Third quarter analog revenue rose 18% year-over-year to $1.8 billion, due to the inclusion of a full quarter of Silicon Valley Analog revenue. Revenue from Power Management and High Volume Analog & Logic increased while revenue from High Performance Analog declined.
TI closed its acquisition of National Semiconductor on September 23, 2011 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 4% from a year earlier to $520 million, due to lower revenue from products sold into communications infrastructure applications.
Third quarter Wireless revenue dropped 44% from last year to $325 million, mainly due to lower revenue from baseband products.
Other revenue for the quarter declined 11% year-over-year to $702 million, due to lower DLP revenue, the expiration of transitional supply agreements associated with previously acquired factories, and lower calculator revenue.
The company's orders for the third quarter totaled $3.24 billion, up 6% from the year-ago quarter but down 5% from the prior quarter.
The company's inventory at the end of the quarter was $1.85 billion, down $117 million from a year earlier mainly due to the fair value write-up of inventory that was acquired from National Semiconductor, and down $37 million from the previous quarter.
For the third quarter ended September 30, 2012, TI reported net income of $784 million or $0.67 per share, compared to $601 million or $0.51 per share for the year-ago quarter.
The latest quarter results includes $0.07 of charges associated with the company's $6.5 billion acquisition of National Semiconductor, which was completed in September 2011, and restructuring. The results also include a benefit of $0.22 for changes in taxes and the Japanese pension program.
On average, 31 analysts polled by Thomson Reuters expected the company to earn $0.42 per share for the third quarter. Analysts' estimates typically exclude special items.
Gross margin for the third quarter improved to 51.3% from 50.3% a year earlier, while operating margin increased to 24.8% from 23.5% last year.
Revenue for the third quarter fell 2% to $3.39 billion from $3.46 billion in the same quarter last year. Third quarter revenue grew 2% sequentially. Thirty-eight analysts had a consensus revenue estimate of $3.35 billion for the third quarter.
In its mid-quarter update last month, TI had narrowed its third quarter revenue guidance to a range of $3.27 billion to $3.41 billion from its previous guidance of $3.21 billion to $3.47 billion. At that time, the company had also revised its third quarter earnings outlook to a range of $0.38 to 0.42 per share, compared to its prior guidance of $0.34 to 0.42 per share. However, the company's earnings guidance did not include the $0.22 benefit for changes in taxes and the Japanese pension program.
Looking forward to the fourth quarter, the company forecast revenue of $2.83 billion to $3.07 billion and earnings of $0.23 to $0.31 per share. The company said the fourth quarter earnings per share will be negatively impacted by about $0.06 per share from acquisition and restructuring charges.
Analysts currently expect the company to earn $0.53 per share on revenue of $3.60 billion for the fourth quarter.
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by RTT Staff Writer
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