Texas Instruments Earnings: Top-Line Ticks Lower

S&P 500 (NYSE:SPY) component Texas Instruments Incorporated (NASDAQ:TXN) reported net income above Wall Street’s expectations for the third quarter. Texas Instruments designs and makes semiconductors that it sells to electronics designers and manufacturers all over the world.

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Texas Instruments Incorporated Earnings Cheat Sheet

Results: Net income for Texas Instruments Incorporated rose to $784 million (67 cents per share) vs. $601 million (51 cents per share) in the same quarter a year earlier. This marks a rise of 30.4% from the year-earlier quarter.

Revenue: Fell 2.2% to $3.39 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Texas Instruments Incorporated beat the mean analyst estimate of 39 cents per share. Analysts were expecting revenue of $3.35 billion.

Quoting Management: “TI revenue grew sequentially and operations were well executed even though the economy and semiconductor market remained weak and likely will get weaker in the fourth quarter,” said Rich Templeton, TI’s chairman, president and CEO. “Our core businesses of Analog and Embedded Processing each grew revenue by two percent. Our operations were disciplined, with expenses and inventory levels both down, and our core businesses grew profit faster than revenue.”

Key Stats:
The company reported a profit increase last quarter, breaking a four-quarter stretch of year-over-year profit losses. In the second quarter, net income fell 33.6% from the year earlier, while the figure fell 60.2% in the first quarter, 68.4% in the fourth quarter of the last fiscal year and 30% in the third quarter of the last fiscal year.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 3 cents in the second quarter, by 2 cents in the first quarter, and by 3 cents in the fourth quarter of the last fiscal year.

For four consecutive quarters, revenue has fallen. Revenue declined 3.6% to $3.33 billion in the second quarter. The figure fell 8% in the first quarter from the year earlier and dropped 3% in the fourth quarter of the last fiscal year from the year-ago quarter.
Margins increased in the second quarter after dropping the quarter before. Gross margin grew one percentage points from the year-earlier quarter to 51.3%. In the first quarter, the figure rose 1.2 percentage points to 49.5% from the year earlier quarter.
Looking Forward: Over the past ninety days, the average estimate for the fourth quarter has fallen from 52 cents per share to 48 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. The average estimate for the fiscal year is now $1.74 per share, down from $1.80 sixty days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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