Recently, Texas Instruments ( TXN ), or "TI,"
narrowed its revenue and earnings expectations for the second
quarter of 2013. Following the announcement, itsshare price dropped
1.69% in after-hours trading.
The chipmaker now expects sales of $2.99-$3.11 billion versus
its previous guidance of $2.93-$3.17 billion. The earnings outlook
has also been narrowed to 39-43 cents per share from the previous
guidance of 37-45 cents.
Though the chipmaker has tightened its guidance range, the
midpoint remains unchanged. According to data compiled by
Bloomberg, analysts expect sales of $3.06 billion, slightly above
the midpoint of management guidance of $3.05 billion. However,
earnings expectations of 41 cents were in line with management
Management stated that it is seeing improving demand for its
chips from industrial customers with automotive continuing to grow
sequentially in the second quarter. TI said that the demand for
chips used in tablets and smartphones was better-than-expected but
revenues from legacy wireless product lines would decline
sequentially in the second quarter as the company continues to wind
However, the company admitted that it was still seeing weak
demand for the chips used in personal computers and consumer
devices such as game consoles.
Additionally, the company stated that the inventories remain
lean at all customers and particularly at distributors. Also, the
company expects to keep capex at about 4% of revenue until the
revenue reaches 18 billion a year. We believe that the slight
increase in demand will increase the orders for the company, which
will have a positive impact on the company's sales.
Like other chipmakers, TI has struggled in recent quarters due
to a slow global economy and weak consumer spending. To maintain
momentum, the company responded in part by cutting costs and trying
to expand the use of its application processors on embedded
solutions for the automobile, industrial and other non-consumer
markets, which have a longer life cycle.
Texas Instruments is one of the largest suppliers of analog and
digital signal processing (DSP) integrated circuits. The company's
compelling product lineup, increasing differentiation in its
business, restructuring activities and lower-cost 300mm capacity
should drive earnings in the longer term. In the first quarter, TI
posted decent numbers, with bottom line numbers surpassing our
Currently, Texas Instruments has a Zacks Rank #3 (Hold). Other
stocks that have been performing well and are worth considering
include STMicroelectronics NV ( STM ),
Magnachip Semiconductor ( MX ), Microchip
Technology ( MCHP ), all carrying a
Zacks Rank #2 (Buy).MICROCHIP TECH (MCHP): Free Stock Analysis
ReportMAGNACHIP SEMI (MX): Free Stock Analysis ReportSTMICROELECTRON (STM): Free Stock Analysis
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