TI Profit Tops Estimate; Outlook Upbeat

(RTTNews) - Texas Instruments Inc. (TXN), the world's largest maker of analog chips, said Monday after the markets closed that its second quarter profit rose 48% from last year, helped mainly by a hefty gain from technology transfer to a customer even as revenue declined 9%.

The company's quarterly earnings per share, excluding items, also came in above analysts' expectations, but its quarterly revenue fell shy of analysts' forecast. At the same time, the company gave an upbeat outlook for the third quarter.

Rich Templeton, TI's chairman, president and CEO, said, "Our revenue ended the quarter as expected, up 6 percent sequentially. Excluding legacy wireless, revenue grew 8 percent; our positions in industrial and automotive markets were important contributors to the sequential growth in revenue. Additionally, backlog increased, and with it, visibility into the second half improved."

TI shares are currently gaining 1.82% in after hours trading after closing the day's regular trading session at $37.42, up 16 cents. The shares trade in a 52-week range of $26.14 to $38.16.

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 fell 3% year-over-year to $1.7 billion, mainly due to lower Power Management revenue. High Performance Analog revenue also declined, while Silicon Valley Analog and High Volume Analog & Logic revenue were about even.

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 7% from a year earlier to $618 million, mainly due to higher Microcontroller revenue.

Other revenue for the quarter declined 28% year-over-year to $684 million, mainly due to lower revenue from legacy wireless products.

For the second quarter ended June 30, 2013, TI reported net income of $660 million or $0.58 per share, compared to $446 million or $0.38 per share for the year-ago quarter.

The latest quarter results include a gain associated with the transfer of wireless connectivity technology to a customer and higher-than-expected charges associated with previously announced restructuring. The net impact of those items was a benefit of $0.16 to EPS.

On average, 33 analysts polled by Thomson Reuters expected the company to earn $0.41 per share for the second quarter. Analysts' estimates typically exclude special items.

Gross margin for the second quarter improved to 51.5% from 49.5% a year earlier, while operating margin increased to 29.7% from 17.9% last year.

Revenue for the second quarter fell 9% to $3.05 billion from $3.34 billion in the same quarter last year. Thirty-five analysts had a consensus revenue estimate of $3.06 billion for the second quarter.

In its mid-quarter update last month, TI had narrowed its second quarter revenue guidance to a range of $2.99 billion to $3.11 billion from its prior guidance of $2.93 billion to $3.17 billion. The company had also narrowed its second quarter earnings outlook to a range of $0.39 to $0.43 per share from its earlier outlook range of $0.37 to $0.45 per share. Looking forward to the third quarter, the company forecasts revenue of $3.09 billion to $3.35 billion and earnings of $0.49 to $0.57 per share. Analysts currently expect the company to earn $0.51 per share on revenue of $3.20 billion for the third quarter.