Texas Instruments Raises Second-Quarter Forecasts (Update3)
bloomberg.com
June 8 (Bloomberg) -- Texas Instruments Inc., the world's biggest maker of mobile-phone chips, raised its second-quarter sales and profit forecasts as more consumers buy handsets in India and China. The shares rose in extended trading.
Sales will be $3.63 billion to $3.78 billion, compared with a prior forecast of $3.46 billion to $3.75 billion, the Dallas- based company said today in a statement. Profit from operations will be 46 cents to 48 cents a share, compared with an April forecast of 38 cents to 43 cents, helped by a tax gain.
Texas Instruments's increased outlook reflects rising demand for cheaper phones in emerging markets as well as more advanced handsets that play videos and surf the Web. The Semiconductor Industry Association yesterday said industry sales will climb 9.8 percent this year, more than the group previously forecast.
``These look like good numbers,'' said Lawrence Borgman, an analyst at Jesup & Lamont Securities in New York who rates the shares ``buy.'' ``People probably will breathe a sigh of relief. There don't appear to be any inventory problems.''
Shares of Texas Instruments gained 83 cents, or 2.7 percent, to $31.55 as of 6:13 p.m. in extended New York Stock Exchange trading from a $30.72 close. They are down 4.2 percent this year, compared with a 6.8 percent drop in the Philadelphia Semiconductor Index.
A sales tax benefit and a $70 million payment from a patent litigation settlement involving Conexant Systems Inc. will boost earnings by as much as 6 cents this quarter, Texas Instruments said today.
No Slowdown
Texas Instruments anticipates more growth in both emerging markets and third-generation devices, spokesman Ron Slaymaker said on a conference call. The chip market is consistent with the company's expectations, he said.
``What we are hearing from our customers on backlog does not indicate a shift in demand,'' Slaymaker said. ``We're not seeing a slackening at all at this point.''
Excluding the tax gain and Conexant payout, Sanford C. Bernstein analyst Adam Parker estimates a profit of 41 cents on sales of $3.62 billion this quarter. He is the top-rated chip analyst by Institutional Investor magazine. On average, analysts estimate sales will rise to $3.61 billion, according to a Thomson Financial survey.
Second Half
In last year's second quarter, Texas Instruments had net income of $628 million, or 38 cents, on sales of $3.24 billion, which included a testing and sensors unit that was sold on April 27. Excluding a tax gain, profit was 32 cents.
Chief Executive Officer Rich Templeton last month said the company is prepared for a strong second half and inventory levels are in good shape. Slaymaker today reiterated inventory levels are fine and said the second half will be in line with seasonal demand, rather than a ``blowout'' period.
The company dominates the market for chips that use GSM phone technology, or global system mobile, which is most prevalent in European markets. Smaller competitor Qualcomm Inc. uses CDMA technology, or code-division multiple access, that works with networks run by Verizon Wireless and Sprint Nextel Corp.
The Semiconductor Industry Association is predicting sales of microchips, the brain of electronic devices, will rise to about $249.6 billion from $227.5 billion in 2005. The San Jose, California-based industry group in February forecast a 7.9 percent gain to about $245 billion. |
