Earnings Preview : Texas Instruments (NYSE: TXN) - Fourth Quarter Earnings Preview 2009
Monday, January 25, 2022 12:44 PM

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Texas Instruments (NYSE: TXN), the world's second biggest maker of mobile phone chips, is scheduled to release its financial results for fourth quarter of fiscal year 2009 after the market close on Monday, January 25, 2010. Analysts, on average, expect the company to report earnings of 49 cents a share on revenue of $2.98 billion. In the year ago quarter, the company reported earnings of 21 cents per share on revenue of $2.49 billion.

Texas Instruments Incorporated engages in the design and sale of semiconductors to electronics designers and manufacturers worldwide. It operates in four segments: Analog, Embedded Processing, Wireless, and Other

In October, the Dallas, Texas-based company reported that its third quarter profit that exceeded Wall Street estimates. Net income dropped by 4% to $538 million from $563 million in the year-ago quarter. Earnings per share fell 2% to $0.42 from $0.43 in the year-ago quarter. Revenue declined 15% to $2.88 billion from $3.39 billion in the same quarter last year, due to the declines across all segments, particularly the Wireless segment. Operating profit for the quarter rose 2% to $763 million from $746 million in the previous year quarter, helped by lower operating expenses, as well as lower manufacturing costs. All the four segments posted a double-digit revenue growth over the prior quarter, due to the increased demand for its products. Analysts, on average, expected the company to report earnings of $0.39 per share on revenue of $2.82 billion.

Gross margin increased 570 basis points sequentially to 51.4% of revenue. Compared to the year ago quarter, gross margin increased 290 basis points on $507 million lower revenue and slightly higher utilization.

Last month, the chipmaker raised its fourth-quarter earnings forecast to a range of $0.47 per share to $0.51 per share from previous guidance range of $0.42 per share to $0.50 per share. The company anticipates fourth-quarter revenue in the range of $2.90 billion and $3.02 billion, versus its prior outlook range of between $2.78 billion and $3.02 billion.

Like most chipmakers, Texas Instruments suffered a sharp decline in demand for its products as sales of consumer electronics plunged after last year's global financial panic and a severe economic downturn. However, demand for chips improved in the second half of 2009 amid signs of economic stabilization. Global semiconductor sales rose to $22.6 billion in November, up 3.7% from October and up 8.5% year over year, according to the Semiconductor Industry Association. The SIA now predicts that worldwide industry sales will grow 10% in 2010, to $242 billion, and another 8% in 2011, to around $262 billion. According to technology research firm Gartner, worldwide mobile phone sales, which increased 0.1% from the year-ago quarter, are expected to remain strong in the fourth quarter primarily due to solid holiday season.

Early this month, Texas instruments unveiled its electronic book reader platform at Consumer Electronic Show in Las Vegas that it claims will reduce the footprint of e-readers by 200 square millimeters and extend their battery life by 50 percent. The latest move marks the chipmaker's entry into the nascent but rapidly growing e-book market.

Recently, the company declared a quarterly cash dividend of 12 cents per share of common stock, payable February 22, 2010.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 12.85 and PEG ratio (5 yr expected) of 2.19. In terms of stock performance, Texas Instruments shares have gained 69 percent over the past year. Shares of the company rose 33 cents or 1.43% to $23.44 in morning session on Monday.

Disclosure: Author doesn't own any of the stocks discussed here


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