Texas Instruments Reports Solid First-Quarter Results

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Texas Instruments reported solid first-quarter earnings and gave investors a second-quarter outlook that were in line with expectations. TI’s revenue in the March quarter was $2.89 billion, at the high end of the firm’s revised forecast revenue range of $2.80 billion to $2.91 billion discussed in early March. Revenue was down 3% sequentially and down 8% from the year-ago quarter. Sales from TI’s core analog chip business were down 1% sequentially due to weakness in highvolume analog chips sold into PCs and consumer products.

However, embedded chip sales were up 3% sequentially, thanks to healthy microcontroller demand from a host of industrial customers. TI believes that its business improved steadily through the March quarter, as the global macroeconomic picture improved and customers replenished their chip inventory with the firm. Demand from industrial and auto customers held up well, while sales to PC peripheral and into some consumer electronics products, like gaming consoles and TVs, was especially weak. Gross margins declined 90 basis points to 48% due to lower sales levels from the December quarter.

For the June quarter, TI expects revenue in the range of $2.93 billion to $3.17 billion, which would represent 2%-10% sequential sales growth. The forecast was modestly better than the 1%-4% growth expected by another broad-based analog chipmaking peer, Linear Technology’s LLTC , which reported earnings last week. Analysts attribute the difference to TI’s calculator business, which should see a seasonal sales boost and could contribute about three percentage points of TI’s June sequential growth.

All in all, TI is well on its way to transforming itself into a more profitable chipmaker, but the firm will still need to see strong analog and embedded chip growth in order to both fully utilize its manufacturing facilities and overcome legacy wireless revenue headwinds.

 

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