Dallas-based TI reported a Texas-sized Q4 2009 profit increase Monday afternoon of 512% as compared to Q4 2008 and 22% as compared to Q3.

Net income of $655 million was accompanied by revenue of just more than $3 billion, up 21% year over year and 4% sequentially, and EPS (earnings per share) of $0.52, up 550% year over year and up 24% sequentially.

Financial analysts this morning attributed TI’s solid quarter largely to its analog business’ growth. The segment’s $1.289 billion in Q4 revenue showed 27% growth year over and 9% growth quarter over quarter, encouraged by what Barclays Capital semiconductor industry analysts described as TI’s “traction in power management.”

“TXN's [TI’s] analog business, at $1,289 million or 43% of sales, increased 9% QoQ [quarter over quarter] on stronger high volume analog (HVAL), high performance analog (HPA), and power management,” Tim Luke, an analysts with Barclays, wrote in a report this morning. “Revenue from power management grew the largest in the analog product area led by growth in power supplies for computing applications, as well as power management solutions for displays, as LCD TVs, LED back-lighting and power efficiency gain importance. Additionally, strength in notebooks and smartphones also led to increased demand for power management solutions. “

Barclays expects TI’s analog growth to continue into the March quarter, estimating a 9.8% sequential revenue climb based on management statements that inventory continues to remain lean at EMS vendors, distributors, and OEMs. “Management sees early signs of a recovery in the industrial markets in addition to pent-up demand for PC upgrades in emerging markets where TXN is well positioned to benefit from its power management offerings,” Luke said. “Longer term, TXN's competitive positioning remains strong and management remains committed to allocating appropriate resources to grow the analog business.

Luke continue to note that TI’s recent purchase of assets from bankrupt Qimonda to produce the world’s first analog chips on 300-mm wafers could likely accelerate the company’s “competitive position as a low-cost producer of analog chips (likely 30% reduction in production cost from 200-mm wafers). We believe that in terms of mix, HVAL currently represents 40% of analog revenues, with power and HPA each representing 30% respectively.”

TI CEO Rich Templeton noted in a statement on the Q4 results that the company is continuing to ramp its Richardson, Texas, 300-mm analog fab for which the Qimonda assets were purchased. 

TI’s other main segments, wireless and embedded processing, also pulled their weight in Q4. Wireless showed Q4 revenue of $732 million, up 13% year over year and up 8% quarter over quarter. And embedded processing showed Q4 revenue of $412 million, up 21% year over year and up 5% sequentially.

Bucking the trend among cautious chip industry companies, TI said it does not expect the typical Q4 to Q1 seasonal decline. Instead, the company said it anticipates possible revenue growth.

"In the fourth quarter, demand was strong across end markets without the usual holiday slowdown,” Templeton said. “Throughout, we believe customer and channel inventories have been lean. With demand continuing to be solid and inventories well below historical levels, our outlook for the first quarter reflects the likelihood of sequential growth instead of the typical seasonal decline.”

Looking to Q1, TI estimated revenue of $2.95 billion to $3.19 billion. EPS is expected in the range of $0.44 to $0.52.

For full-year 2010, TI estimated R&D at $1.5 billion and capital expenditures at $900 million.

TI’s Q4 capped off a challenging year for the company, forced by global economic conditions. Full-year 2009 revenue was down across all TI segments with total sales at $10.427 billion, a 17% decrease compared to 2008. 2009 income of $1.47 billion was down 23% as compared to 2008. And 2009 EPS of $1.15 was down 20% as compared to 2008.

By: DocMemory
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