The "guts" of tech:TXN.......Texas Instruments profit
beats estimates
DALLAS (Reuters) - Texas Instruments Inc. , the world's No. 1
maker of computer chips for mobile phones, Monday said
first-quarter net income jumped 69 percent on robust demand for
chips for wireless communications.
The manufacturer of the chips used in about two-thirds of the
world's digital cellular phones said that on a pro forma basis, net
income climbed to $470 million, or 55 cents a share, from $278
million, or 34 cents, in the year-earlier quarter.
Analysts had forecast earnings of 53 cents a share for the quarter, according to a survey by First
Call/Thomson Financial. But expectations that Dallas-based Texas Instruments would beat the
forecast led to a ``whisper' estimate of 57 cents, according to www.whispernumber.com.
TI reported its results after New York markets closed and its stock ended the day at 156-15/16
on the New York Stock Exchange -- rebounding about 19 percent, or 25-3/16, after a huge drop
Friday.
The stock was dragged off its all-time closing high of 187-7/8, reached in March, during last
week's broad sell-off in technology stocks. It slid from an April 7 close of 166-8/16 to 131-3/4 on
Friday.
``The net of it is, seasonally this is usually a weak quarter for them, and it came in stronger,'
Salomon Smith Barney analyst Jonathan Joseph. ``Their lead times stretched, their prices rose. All
those are good signs, and TI is a good indicator for the sector in general,' he said.
TI said it expected its core semiconductor business to see robust growth in 2000, driven by
communications end-equipment markets, including wireless and broadband.
Semiconductors growth is driven in large part by specialized chips called Digital Signal Processors.
Such chips are the heart of wireless and Internet connection technology, converting sounds and
images into the digital information that computers use.
DSPs and analog chips used in a range of new technology account for about 60 percent of TI's
semiconductor revenues, which rose 30 percent in the first quarter from the year earlier to $2.27
billion.
Overall, total revenues rose 27 percent to $2.65 billion from $2.08 billion in the year-ago quarter,
TI said.
TI also said it was raising capital expenditures this year to $2.5 billion from an earlier projection of
$2.0 billion to answer growing demand for DSP and analog products, a move that will hold back
profits but allow increased capacity and higher sales.
But Chief Financial Officer Bill Aylesworth said TI was not experiencing any problems supplying
customers despite the continued boom in demand for cell phones, hi-speed modems and devices
like Internet music players.
``You hear about other (companies') products that from time to time threaten to be a bottleneck,
and I'm not aware of any time that TI products are the bottleneck,' he told analysts in a phone
conference.
TI reiterated its forecast that it will reach a pro forma operating profit margin of 25 percent by the
end of 2000 and said that revenues in the second quarter would exceed those generated in the first
quarter.
Ayelsworth said those two factors meant earnings per share should rise in the second quarter from
the quarter before.
TI said that under generally accepted accounting principles, or without adjusting figures for $54
million in one-time charges, net income in the quarter reached $426 million, or 50 cents a diluted
share, compared with $255 million, or 31 cents, a year earlier.
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