Texas Instruments Inc. (TXN), the world's largest maker of analog chips, said Monday after the markets closed that its first quarter profit rose 37% from last year, helped mainly by lower acquisition charges and a discrete tax benefit even as revenue declined 8%.
The company's quarterly earnings per share also came in above analysts' expectations as did its quarterly revenue. At the same time, the company gave an upbeat forecast for the second quarter.
Rich Templeton, TI's chairman, president and CEO, said, "Our revenue and earnings ended the quarter at the high end of our expected range. Customers continued to operate in a real-time mode, maintaining minimal component inventory and ordering parts as they were needed. Our short product lead times, well-positioned inventory and ready manufacturing capacity allow us to respond rapidly to changes in demand."
TI shares are currently gaining 0.26% in after hours trading after closing the day's regular trading session at $34.81, up 56 cents or 1.64%. The shares trade in a 52-week range of $26.06 to $35.92.
TI makes chips used in phones, telecommunications equipments and calculators, making the company's earnings an indicator of demand across the economy.
First quarter analog revenue fell 2% year-over-year to $1.6 billion, mainly due to to lower Silicon Valley Analog revenue. High Volume Analog & Logic revenue and High Performance Analog revenue also declined while revenue from Power Management increased.
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 rose 4% from a year earlier to $561 million, mainly due to higher Microcontroller revenue.
Other revenue for the quarter declined 24% year-over-year to $676 million, mainly due to lower revenue from legacy wireless products.
In February, the company announced a 33% increase in its quarterly dividend, and it added another $5 billion to its stock buyback authorization.
For the first quarter ended March 31, 2013, TI reported net income of $362 million or $0.32 per share, compared to $265 million or $0.22 per share for the year-ago quarter.
On average, 30 analysts polled by Thomson Reuters expected the company to earn $0.30 per share for the first quarter. Analysts' estimates typically exclude special items.
The latest quarter net income include a discrete tax benefit of $65 million associated with the retroactive reinstatement of the federal R&D tax credit, which was signed into law in January.
Gross margin for the first quarter narrowed to 47.6% from 49.0% a year earlier, while operating margin improved to13.7% from 12.7% last year.
Revenue for the first quarter fell 8% to $2.89 billion from $3.12 billion in the same quarter last year. Thirty-four analysts had a consensus revenue estimate of $2.85 billion for the first quarter.
In its mid-quarter update last month, TI had raised the bottom ends of its first quarter revenue guidance to a range of $2.80 billion to $2.91 billion from its earlier guidance of $2.69 billion to $2.91 billion and earnings outlook to a range of $0.28 to $0.32 per share from its prior outlook of $0.24 to $0.32 per share.
Looking forward to the second quarter, the company forecast revenue of $2.93 billion to $3.17 billion and earnings of $0.37 to $0.45 per share. Analysts currently expect the company to earn $0.38 per share on revenue of $3.04 billion for the second quarter.
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