Filed Under: ,
Tickers in this Article: TXN
Texas Instruments Incorporated (Nasdaq:TXN) announced its results for the third quarter on October 22, 2012. Texas Instruments designs and makes semiconductors that it sells to electronics designers and manufacturers all over the world.

Earnings season is important to investors because it shows how much profit is left in the company's hand after deducting costs from revenue. SEE: 5 Tricks Companies Use During Earnings Season

The Numbers: Texas Instruments managed to exceed estimates with stronger-than-expected EPS and revenues. The company reported 67 cents per share versus the 39 cents per share estimate and revenues of $3.39 billion versus the $3.35 billion estimate. EPS rose 31.4% while revenue declined 2.2% from the same period last year. Revenue has fallen in the past four quarters. Texas Instruments' profit for the third quarter was $784 million. This is 30.4% higher than the year-ago quarter. After posting a profit last quarter, the company breaks a streak of four consecutive quarters of year-over-year profit drops.

Management Quote: "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."

A Look Back: Margins increased in the second quarter after dropping the quarter before. Gross margins grew to 51.3%, up one percentage points from the year-earlier quarter. In the first quarter, the figure rose 1.2 percentage points to 49.5% from the year earlier quarter.

Net income has dropped 32.4% year-over-year on average across the last five quarters. Performance was hurt by a 68.4% decline in the fourth quarter of the last fiscal year from the year-earlier quarter.

Looking Ahead: Analysts appear increasingly negative about the company's results for the next quarter. The average estimate for the fourth quarter has moved down from 52 cents a share to 48 cents over the last 90 days. A decreasing earning estimate is a negative sign and usually leads to a drop in the stock price. For the fiscal year, the average estimate has moved down from $1.80 a share to $1.74 over the last 60 days.

comments powered by Disqus

Trading Center