Texas Instruments Inc. Earnings Cheat Sheet: Margins Shrink as Revenue and Net Income Fall

S&P 500 (NYSE:SPY) component Texas Instruments Inc. (NYSE:TXN) reported its results 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 Earnings Cheat Sheet for the Third Quarter

Results: Net income for Texas Instruments Inc. fell to $601 million (51 cents per share) vs. $859 million (71 cents per share) a year earlier. This is a decline of 30% from the year earlier quarter.

Revenue: Fell 7.3% to $3.47 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: TXN fell short of the mean analyst estimate of 57 cents per share. It beat the average revenue estimate of $3.33 billion.

Quoting Management: “The highlight of the third quarter was the completion of the purchase of National Semiconductor. We welcome the people of National to TI, and together we’re already taking our combined portfolio of almost 45,000 Analog products to customers all over the world,” said Rich Templeton, chairman, president and chief executive officer. “Our revenue for the third quarter was higher than we expected though, overall, the quarter was below the seasonal average. We expect the same in the fourth quarter as economic uncertainty continues to weigh on demand in almost every major market segment in which we operate. We are well prepared to continue to gain share in our core businesses, no matter the economic conditions.”

Key Stats:

Gross margins fell 4.2 percentage points to 50.3%. The contraction appeared to be driven by falling revenue, as the figure fell 7.3% from the year earlier while costs rose 1.2%.

The company has now seen net income fall in each of the last two quarters. In the second quarter, net income fell 12.6% from the year earlier quarter.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 56 cents versus a mean estimate of net income of 53 cents per share.

Revenue has fallen in the past two quarters. In the second quarter, revenue declined 1.1% to $3.46 billion from the year earlier quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is 56 cents per share, down from 64 cents ninety days ago. For the fiscal year, the average estimate has moved down from $2.38 a share to $2.25 over the last ninety days.

Competitors to Watch: National Semicond. Corp. (NYSE:NSM), Analog Devices, Inc. (NYSE:ADI), Intersil Corporation (NASDAQ:ISIL), Linear Technology Corp. (NASDAQ:LLTC), ON Semiconductor Corp. (NASDAQ:ONNN), Intel Corporation (NASDAQ:INTC), STMicroelectronics N.V. (NYSE:STM), Maxim Integrated Products Inc. (NASDAQ:MXIM), Broadcom Corporation (NASDAQ:BRCM), and Marvell Tech. Group Ltd. (NASDAQ:MRVL).

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(Source: Xignite Financials)