), or "TI," raised its revenue and earnings expectations to the
upper end of its previously forecasted ranges for the first
quarter of 2013.
The chipmaker now expects sales of $2.80-$2.91 billion versus
its previous guidance of $2.69-$2.91 billion. The lower end of
the earnings outlook range has also been raised to 28-32 cents
per share from the previous guidance of 24-32 cents. The earnings
guidance includes acquisition and restructuring charges and tax
benefit of 6 cents per share.
Management stated that it is seeing improving demand for its
chips from industrial customers and better-than-expected wireless
chip sales. TI said that the demand for chips used in tablets and
handsets was better-than-expected, but revenue from the Wireless
segment would still decline in the first quarter as it is
gradually defocusing the mobile business (and transferring the
remaining wireless business to the Other segment).
However, the company admitted that it was still seeing
weakness in the notebook and communications infrastructure
Like other chip makers, 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.
Last month, the company increased its quarterly dividend by
33% and authorized the repurchase of additional shares worth $5
billion. Management said that the company is witnessing improving
order backlog for the first time in several quarters due to
improving demand from end-users rather than chip inventory
restocking. These facts provided by TI are modestly encouraging
but does not necessarily mean that the broader semiconductor
market is on the road to recovery.
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 fourth
quarter, TI posted decent numbers, with both revenues and
earnings surpassing our expectations.
Currently, Texas Instruments has a Zacks Rank #3 (Hold). Other
stocks that have been performing well and are worth considering
), all carrying a Zacks Rank #2 (Buy).
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