Texas Instruments Predicts Sales Topping Some Estimates

(Bloomberg) -- Texas Instruments Inc., seeking to turn investor attention back to its performance after dismissing its chief executive officer last week, predicted third-quarter sales and earnings that may top some analysts’ estimates.

Profit will be $1.41 to $1.63 a share in the current period, the Dallas-based company said Tuesday in a statement. Revenue will be $4.11 billion to $4.45 billion. On average, analysts predicted earnings of $1.48 a share on sales of $4.25 billion, according to data compiled by Bloomberg.

The chipmaker reappointed Rich Templeton to the CEO post last week when Brian Crutcher was pushed out after less than two months on the job because of an unspecified code-of-conduct violation. Templeton, who held the job for more than 13 years, is taking on the position permanently and will seek to put the attention of investors back on the company’s effort to deliver returns.

Under Templeton, the company had transformed itself to focus on analog semiconductors. That type of basic component has enjoyed a renaissance as more and more every day objects get electronic functionality. Texas Instruments is now bigger and more profitable than it was when it made digital chips for phones and computers.

The world’s fifth-largest chipmaker has tens of thousands of products and thousands of customers spanning home electronics to the space industry. That makes it, more than any of its rivals, a proxy for demand across the economy. Demand from key automotive and industrial markets remains strong, Chief Financial Officer Rafael Lizardi, said in a telephone interview.

Pending U.S. tariffs on semiconductor imports from China will affect about 1 percent of the company’s revenue and Texas Instruments is taking steps to mitigate even that, he said. Still, the fall out from the spat between the world’s two largest economies could hurt overall demand, he said.

“The direct impact at the end of the day is minimal,” he said. If tariffs are applied, “could there be secondary effects? Sure, but that goes beyond TI, it goes beyond the semiconductor industry, it could be the world economy losing half a point of GDP growth because of this trade conflict.”

Texas Instruments shares were little changed in extended trading after the announcement. They had earlier closed at $113.80 in New York.

The company, like many chipmakers, has benefited from the increasing amount of electronic functions in vehicles. That source of growth may be waning as automakers worry about demand amid the escalating trade war, according to analysts such as Amit Daryanani at RBC Capital Markets.

Last week, when it announced Crutcher’s departure, the company said second-quarter revenue rose to $4.02 billion, up 9 percent from a year earlier. Profit was $1.40 a share, including a 3-cent per-share tax benefit. On average, analysts had predicted profit of $1.30 a share on sales of $3.97 billion.

Texas Instruments’ analog chips perform the fundamental task of translating real-world inputs, like sounds and touch, into electronic signals. The company gets the biggest chunk of its sales from makers of industrial equipment. It’s also one of the biggest providers of silicon to the automotive industry. Unlike Intel Corp. and Qualcomm Inc., it doesn’t make chips that cost tens of millions of dollars to develop and then quickly become obsolete, making it less vulnerable to sudden swings in demand or competitive pressure.

©2018 Bloomberg L.P.