Texas Instruments satisfies Q3 targets but still disappoints

While TI hit the targets, investors seemed shaken by drops in revenue from the same quarter last year.
Written by Rachel King, Contributor

Texas Instruments reported third quarter earnings after the bell on Monday, but the semiconductor didn't deliver as well compared the two other big releases of the day: Netflix and VMware.

The hardware giant reported a net income of $629 million, or 56 cents per share (statement).

Non-GAAP earnings were 56 cents per share on a revenue of $3.23 billion.

Wall Street was looking for earnings of 53 cents per share on a revenue of $3.23 billion.

However, while TI hit the targets, investors seemed shaken by drops in revenue and EPS from the same quarter last year. As a result, shares were up and down frequently in after-hours trading.

TI chairman, president and CEO Rich Templeton reflected on the quarter in prepared remarks, attempting to spin the report in a more positive light by remarking the results reflect "the positive structural changes we've made at TI over the past few years as we've focused on Analog and Embedded Processing."

"Analog and Embedded Processing are now 80 percent of TI's revenue, eight points higher than a year ago. The combined revenue from these two businesses grew 10 percent sequentially and 7 percent from a year ago. Our legacy wireless products declined to less than 2 percent of revenue.

Templeton was a little more candid in his remarks about the outlook, admitting, "At the mid-point of our fourth-quarter guidance range, revenue would decline eight percent sequentially and be about even with the fourth quarter of 2012."

He added the caveat that excluding "legacy wireless revenue, which should decline to about $50 million in the fourth quarter, the mid-point of our outlook would deliver eight percent growth from a year ago."

For the fourth quarter, Wall Street is expecting TI to deliver revenue of at least $3.11 billion with non-GAAP earnings of 51 cents per share.

Texas Instruments dipped slightly below those expectations with a revenue guidance range of $2.86 billion to $3.10 billion and earnings projected to fall between 42 and 50 cents per share.

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