Texas Instruments bucks five quarters of sales declines

The semiconductor industry may be turning the corner. After Intel (INTC) announced better-than-expected earnings, Dallas-based Texas Instruments (TXN) has also come out with results that beat analysts' expectations and show an improvement over the prior quarter. While the results are still significantly worse than its performance one year ago, an improving trend is welcome, after five quarters of sales declines.

After the markets closed today, Texas Instruments announced second-quarter net income of $260 million -- 20 cents per share -- on revenue of $2.46 billion. Earnings fell 56 percent from the same period a year ago. Revenue was down 27 percent from the second quarter one year ago but was up 18 percent from the first quarter. Chief executive Rich Templeton said that for the first time in two quarters, the numbers reflected actual demand, rather than inventory corrections.
Driving demand was TI's analog business, as well as increased demand for its calculators. But earnings were up across all of TI's business segments, and the company said that demand had risen particularly for chips used in mobile devices in China.

TI's operating profit fell $490 million, compared with the year-ago quarter, due partly to lower sales, but also because of costs involved with restructuring as well as underused assets. However, operating profit was up by $333 million over the first quarter. Excluding restructuring charges of $85 million,TI's operating profit was $428 million.

Drilling down into its main businesses, TI's analog segment -- especially for its high-performance analog and power-management products, showed strength over the previous quarter. In its Embedded Processing business, the company saw a decline in automotive products but an increase in demand for communications-infrastructure products.

The big driver, though, was increased sales from the prior quarter due to higher catalog-product revenue. In its wireless business, revenue fell from a year ago due to lower baseband sales, but revenue increased for its connectivity products. Finally, the company saw a decline in revenue from royalties, from its DLP line of products and ASIC processors, from year ago.

The company did repurchase stock during the quarter. TI used $251 million in the quarter to repurchase 13.4 million shares, and it paid dividends of $139 million.

Looking forward, the company said to expect revenue of $2.5 to $2.8 billion and earnings per share of 29 cents to 39 cents per share in its third quarter.

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