Texas Instruments Trims Guidance - Analyst Blog
14 March 2012 - 2:32AM
Zacks
Recently, Texas Instruments (TXN), or "TI,"
slashed its revenue and earnings expectations for the first quarter
of 2012.
The chipmaker now expects sales of $2.99 billion to $3.11
billion, below its previous guidance range of $3.02 billion to
$3.28 billion. The earnings outlook has been lowered to 5 cents
to19 cents per share from the previous guidance of 16 cents to 24
cents.
We believe that management had previously projected revenues to
decline as a result of macro weakness and hard disk drive shortages
from the Thailand flood.
Now, the company also expects the demand for its OMAP
application processor, which is used in wireless devices like
smartphones and tablets to take a tumble, thereby causing a further
decline in the first quarter.
As the fourth quarter progressed, TI saw strong demand in the
month of December, which pushed up orders during the month. Hence,
management expects inventory correction to end very soon and orders
to improve going forward. Additionally, TI expects automotive and
communications infrastructure end markets to improve and demand to
pick up from the second quarter of 2012.
Texas Instruments is one of the largest suppliers of analog and
DSP integrated circuits. The company reported revenues of $3.42
billion in the fourth quarter of 2011, down 0.8% sequentially and
3.0% year over year. Earnings were also down 25.8% sequentially and
31.4% year over year.
The company’s compelling product line-up, the increased
differentiation in its business, restructuring activities and
lower-cost 300mm capacity should drive earnings in the longer term.
In the fourth quarter, TI unveiled plans to close two older
semiconductor-manufacturing plants in Japan and Texas over the next
18 months to reduce costs and in turn improve profitability.
Texas Instruments is expected to report first quarter results on
April 23, 2012. We do not expect a significant improvement before
the second half of 2012.
Increasing competition from Maxim Integrated
Products (MXIM), Analog Devices (ADI),
Broadcom (BRCM), and Intel (INTC)
are concerns.
Currently, TI has a Zacks #3 Rank, which translates into a
short-term Hold rating.
ANALOG DEVICES (ADI): Free Stock Analysis Report
BROADCOM CORP-A (BRCM): Free Stock Analysis Report
INTEL CORP (INTC): Free Stock Analysis Report
MAXIM INTG PDTS (MXIM): Free Stock Analysis Report
TEXAS INSTRS (TXN): Free Stock Analysis Report
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