Tuesday, October 25, 2005
Texas Instruments Inc. fell short of Wall Street’s profit estimates for the third quarter despite sizzling growth in its semiconductor unit. TI appeared to be bogged down by its Sensors & Controls unit, which is reportedly on the block.
TI (Dallas) on Monday (Oct. 24) reported record revenue of $3.59 billion in the third quarter, an increase of 11 percent from $3.24 billion sequentially and up 10 percent from $3.25 billion in the third quarter of last year.
Net income was $631 million, or $0.38 per share, which included $0.03 of stock-based compensation expenses and $0.01 for higher-than-anticipated taxes.
TI posted a profit of $628 million, or $0.38 a share, in the previous quarter, and $563 million, or $0.32 million, in the like period a year ago.
The company partly missed Wall Street’s estimates of $0.40 a share on sales of $3.55 billion in the third quarter. TI’s own projections called for $0.36-to-$0.38 per share on sales of $3.48-to-$3.62 billion in the period.
Growth was driven by its semiconductor unit. Semiconductor revenue of $3.13 billion increased $370 million sequentially, or 13 percent, due to strong growth in demand for the company's digital signal processors (DSPs), analog and DLP products. Compared with a year ago, revenue increased 13 percent, TI said.
DSP revenue increased 16 percent sequentially and 20 percent from a year ago, primarily due to higher demand from the wireless market. Operating profit in TI’s chip business was $835 million, or 26.6 percent of revenue, up $241 million sequentially and $253 million from a year ago due to higher gross profit.
"In summary, this was an excellent quarter,” said Rich Templeton, president and chief executive, in a statement. "This performance is especially significant as semiconductor inventories declined at TI and distributors."
TI’s Sensors & Controls unit had revenue of $280 million in the quarter, down $15 million sequentially primarily due to lower seasonal demand for controls products and up $4 million from a year ago due to higher demand for automotive sensors products.
Operating profit was $60 million in the unit, or 21.4 percent of revenue, down $12 million sequentially and down $6 million from a year ago due to lower gross profit.
TI’s Educational & Productivity Solutions (E&PS) had sales of $177 million, down $4 million sequentially and down $13 million from a year ago due to lower sales of graphing calculators. Operating profit was $79 million, or 44.7 percent of revenue, even sequentially and down $4 million from a year ago due to lower gross profit.
For the fourth quarter of 2005, TI expects revenue to be in the range of $3.425-to-$3.715 billion. TI expects EPS to be in the range of $0.36 to $0.40. This estimate includes about $0.03 for stock-based compensation expense.
TI’s semiconductor unit is expected to have sales of $3.075-to- $3.325 billion.
By: DocMemory
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