Texas Instruments Q4 soars as execs predict upturn

Texas Instruments Q4 soars as execs predict upturn

Summary: TI's CEO affirms that Q4 revenues were higher than expected across all major product lines, reinforcing the argument that "we're at the bottom of this downturn."

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Although its outlook for the first quarter of 2012 isn't exactly in line with Wall Street expectations, Texas Instruments did blast past fourth quarter estimates while company executives are predicting a continuing rise for the company overall.

Texas Instruments reported a fourth quarter net income of $298 million, or 25 cents a share (statement). Non-GAAP earnings were 26 cents a share on a revenue of $3.42 billion.

Wall Street expected TI to report earnings of 39 cents a share on revenue of $3.25 billion.

For 2011, TI posted $13.7 billion in revenue with a net income of $2.2 billion at $1.88 per share.

CEO and president Rich Templeton explained in a statement that Q4 revenues were higher than expected across all major product lines, reinforcing the argument that "we're at the bottom of this downturn."

I'm pleased to say that despite the downturn and the lower factory utilization that came with it, cash flow from operations was strong and well above levels as compared with similar points in prior downturns. Our strategic focus on our core businesses and efficient investment in capacity are key to our strong generation of cash.

As we move into 2012, we enter the final phase of our planned exit from the baseband market, and thus further tighten our focus on Analog, Embedded Processing and Wireless.

During the company's quarterly conference call on Monday, chief financial officer Kevin March concurred and added that by "looking at classic signs of what we seen in many cycles in the past," he proposed that TI is "near the bottom of this cycle."

TI's head of investor relations, Ron Slaymaker, acknowledged that "our industry clearly doesn't have a history of smooth low slope transitions," but he maintained that TI will "be prepared accordingly" in case these predictions are too optimistic.

Yet, there is one prediction where TI does not appear to be as optimistic as Wall Street analysts would like.

For the outlook, Texas Instruments is predicting a revenue of $3.02 billion to 3.28 billion at the end of Q1 2012 with non-GAAP earnings between 16 to 24 cents a share.

However, Wall Street is expecting a lot more with a revenue of $3.22 billion and earnings at 32 cents a share.

TI will update its Q1 2012 outlook on March 8.

Key points:

  • TI's Q4 2011 gross profit was negatively impacted by costs associated with low levels of factory utilization in the quarter, as well as charges for Wireless baseband inventory.
  • TI announced plans to close two older semiconductor manufacturing facilities in Hiji, Japan, and Houston, Texas, over the next 18 months.
  • TI closed its acquisition of National Semiconductor in September, and it will be consolidated into TI's Analog segment under the name Silicon Valley Analog.

By the numbers:

  • Orders were $2.86 billion, a decrease of 9 percent from Q4 2010 and down 7 percent from Q3 2011.
  • But inventory was $1.79 billion at the end of the quarter, up $268 million from Q4 2010 and down $177 million from Q3 2011.

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