Texas Instruments to Sell Off Unit
Posted on: Tuesday, 10 January 2006, 09:00 CST
By Aman Batheja, Fort Worth Star-Telegram, Texas
Jan. 10--Texas Instruments said Monday that it's selling its sensors and controls business for $3 billion to Bain Capital so it can focus on its fast-growing semiconductor business.
"We believe this transaction unlocks value for all three parties," said Ron Slaymaker, vice president and manager of investor relations for TI.
The sale is just the latest step by the Richardson-based company to move out of slow-growth segments and focus on its booming digital-signal processing and analog semiconductor operations. Since 1996, the company has divested more than a dozen companies, including defense and memory-chip units.
Sensors & Controls, based in Attleboro, Mass., makes components for automobiles and air conditioners.
The company, with about 5,400 employees worldwide, had revenue of more than $1 billion in 2005.
The sale will help the growth of that business, which until now has had to compete for investment dollars with the rest of TI, Slaymaker said.
"For TI to realize Sensors & Controls' full potential, we would need to increase our investment," Slaymaker said. "We prefer to keep our investment focused in this core area."
Over the past three years, the Sensors & Controls unit had shown annual revenue growth of about 7 percent, compared with TI's overall growth rate of about 17 percent, Slaymaker said.
The unit's gross margin for the first three quarters of 2005 was about 35 percent, compared with the company's 47 percent, Slaymaker said.
TI will retain ownership of a small portion of the unit that creates radio-frequency identification, or RFID, systems. The RFID business, with sales of about $110 million last year, will be folded into TI's semiconductor segment, Slaymaker said.
The sale would not affect TI's fourth-quarter results.
Analysts polled by Thomson Financial Network expect Texas Instruments to report fourth-quarter earnings of 42 cents a share.
Texas Instruments shares (ticker: TXN) fell 21 cents Monday to $34.18 on the New York Stock Exchange.
Slaymaker said that the company had not decided what to do with the extra cash flow from the sale but that increasing dividends or buying back shares of TI stock were possibilities.
Aman Batheja, (817) 390-7695 abatheja@star-telegram.com
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NYSE:TXN, Unknown:BCI,
Source: Fort Worth Star-Telegram (Fort Worth, Texas)
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