Earnings Preview : Texas Instruments Inc. (NYSE: TXN) First Quarter 2010
Monday, April 19, 2022 2:27 PM

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Texas Instruments Inc. (NYSE: TXN) is scheduled to report its Q1 2010 results after the market closes on April 25, 2010. Management expects revenue in the $3.07 to $3.19 billion range, which is improved on the low end from its previous forecast of revenue in the $2.95 to $3.19 billion range and earnings-per-share are expected to be in the 48 to 52-cent per share range in the first quarter, up from the previous range of 44 to 52 cents per share. The company expects growth in every segment, including analog and embedded. Wireless is the only segment projected not to grow. 

Texas Instruments, Inc. is a global semiconductor company and one of the world''s leading designers and suppliers of digital signal processors and analog integrated circuits, the engines driving the digitization of electronics. These two types of semiconductor products work together in digital electronic devices such as digital cellular phones. Other semiconductor products include standard logic, application- specific integrated circuits, reduced instruction-set computing microprocessors, microcontrollers and digital imaging devices.  

As for Q4 2009, revenue was up 4% sequentially or 21% from a year ago. Our analog, embedded processing and wireless segments all contributed to sequential growth while the other segments declined due to the lower calculator revenue. Analog revenue grew 9% sequentially and was up 27% from the year ago quarter. Embedded processing revenue grew 5% sequentially and was up 21% from a year ago. Other revenue declined by 9% sequentially due to the seasonal decline in calculator revenue and grew by 17% compared with a year ago. [DLP] was the biggest factor in this growth and more than offset a significant decline in risk micro processors from a year ago. Gross margin increased 150 basis points sequentially to 52.9% of revenue compared with the year ago quarter gross margin increased 890 basis points. Net income in the fourth quarter was $665 million or $0.52 per share. Net income includes $16 million of benefits from discreet tax items. The company paid $351 million in the quarter to repurchase 14.8 million shares of TI common stock and paid dividends of $149 million in the quarter. 

Analysts' estimates for Q1 2010 range from a low of $0.22 to a high of $0.66, compared to a consensus estimate of $0.40, with number of estimates being 15 and the co-efficient variance 31.70. While Consensus is expecting Q1 to be 500bps above seasonal for the average analog semiconductor company, TXN is expecting Q1 to be 9% above seasonal at the mid-point of its guidance. Mid-quarter update reveals that Industrials were strong this quarter, driving growth in Analog HPA and Catalog parts within Embedded processing (50% of embedded revenues), with noted strength within Communication infrastructure, computing, automotive and in the HDTV. Smartphone segment is expected to remain strong and headwinds in the baseband segment in the near term due to the BRCM EDGE ramp at Nokia are likely too. Inventory will build up this quarter and days of inventory would be increased by a few days, with distribution inventory to remain flat QoQ on weeks of inventory basis. Cancellations have not trended up this quarter and orders remain robust, with the utilization levels moving back to normal.   

The stock closed at $26.99 on April 15, 2022 and most analysts' recommend this stock as a relative Overweight with an average price target of $30. The company is expected to gain share in the high margin analog market (40% of revenues), but declining revenues in its wireless business (~15% of revenues) which is now in harvest mode, will cap upside to the multiple.

 

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