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Texas Instruments Posts Record Profit

Posted on: Tuesday, 26 July 2005, 15:00 CDT

Jul. 26--Despite flat revenue compared with a year earlier, Texas Instruments Inc. on Monday reported record operating profit and a 42 percent jump in net income in the second quarter.

The Dallas-based technology company said lower expenses and one-time tax benefits boosted its earnings to $628 million, or 38 cents a share, on revenue of $3.24 billion. In second quarter 2004, it earned $441 million, or 25 cents a share, on $2 million more in revenue.

Even excluding the 6-cent gain from the tax benefits, TI handily beat the consensus of 29 cents of analysts surveyed by Thomson First Call and saw its stock price jump in after-market trading.

While TI shares closed down 16 cents at $30.60 in New York Stock Exchange trading, they gained more than $1.70 in after-market trading following the 3:30 p.m. earnings release.

TI president and chief executive Rich Templeton pointed to the company's analog and digital signal processing products for the strong growth.

He said the industry has worked through an oversupply of digital light processors, used mainly in televisions and projectors.

"We're ... encouraged that the inventory correction that affected our DLP product revenue in the first half of the year is now complete," Templeton said.

"DLP revenue grew 10 percent sequentially [in the second quarter compared with the first], and we expect it will contribute to growth again in the third quarter."

In an interview, chief financial officer Kevin March said television manufacturers shipped out more of TI's DLP products in the second quarter than they bought from TI that quarter.

"That means that they were still draining inventory," March said. "But the fact that they were draining inventory and our revenue was up means that they've probably reached the bottom. They're in balance. Now we should see growth reflecting their growth levels going forward."

March said Texas Instruments is also benefiting from the cellphone industry's move to third-generation networks and phones. The digital broadband chips it sells for 3G phones bring it more than twice as much per phone as similar chips for second-generation phones, he said.

Across TI's product lines, sales "got stronger as we came out of the quarter, and that has continued right into the third quarter," he said.

March told analysts that TI expects earnings of 31 to 35 cents in the third quarter, compared with 32 cents in third quarter 2004, and revenue of $3.29 billion to $3.56 billion, compared with $3.25 billion a year earlier.

TI also said its board of directors was boosting the quarterly dividend from 2.5 cents a share to 3 cents, effective in October, and had authorized the repurchase of an additional $2 billion in TI shares.

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TXN,

Source: The Dallas Morning News

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