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July 20, 2009 11:48 pm
Texas Instruments, the second largest US chipmaker, reported a surge in demand for its products in the second quarter as it beat revenue and profit expectations.
Following Intel’s positive outlook last week, TI gave another boost to the tech sector, forecasting solid growth in the current quarter.
In the same way as Intel, TI had suffered with customers slashing their orders and living off their existing inventories from the end of last year through the first quarter, in order to cope with the recession and an uncertain outlook.
“After sharp inventory corrections in our markets during the prior two quarters, our revenue levels are beginning to more closely reflect end demand,” said Rich Templeton, TI chief executive, in a statement on Monday.
TI is also beginning to benefit from its earlier cost-cutting measures.
“As it will likely take some time before the economy strengthens, we have aligned our operations and expenses to be consistent with the weak environment. As a result, we are seeing healthy trends in our profitability,” Mr Templeton said.
The Dallas-based company reported second-quarter sales of $2.46bn and profits of $260m or 20 cents per share. Analysts expected profits of 19 cents on revenues of $2.42bn, according to a consensus gathered by Bloomberg.
Revenues were 18 per cent higher than the first quarter but were down 27 per cent on the same quarter a year ago. TI’s factories are still under-utilised compared with a year ago, but the company said they had responded to a surge in demand during the quarter.
“Looking ahead, we expect solid sequential growth in the third quarter,” said Mr Templeton. The company predicted revenues of $2.5bn-$2.8bn and earnings per share of 29-39 cents.
Areas of strength for TI were in its core analogue and embedded processing chip businesses.
Sales of TI chips for mobile phones also improved on the first quarter, but the company has ceded leadership to Qualcomm in wireless chips. The San Diego-based company reports its earnings on Wednesday.
Gross margins improved almost 1 per cent to 45.7 per cent, but were down from 52.2 per cent a year ago and still some way short of TI’s goal of 55 per cent.
TI shares were down 1 per cent at $23.39 in after-hours trading in New York on the news. Shares in the company had closed 2.6 per cent higher at $23.61.
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