Texas Instruments Earmarks Profit-Sharing Funds for Workers
Posted on: Wednesday, 12 May 2004, 06:00 CDT
May 13--RICHARDSON, Texas -- Texas Instruments employees can plan on seeing a little something extra in their pay this year that they haven't seen since 2000: profit sharing.
Rich Templeton, who on May 1 officially became TI's chief executive, said Wednesday the company reserved about $70 million for profit sharing during the first quarter. In a recent Securities and Exchange Commission filing, the company said it expects to accrue about that amount each quarter for the rest of the year.
"We intend to retain and keep our great people," Templeton told a large crowd attending the company's annual Wall Street investment analysts' conference. He said TI is moving to a profit-sharing plan that will use the company's operating profit margin as its main benchmark.
The Dallas-based semiconductor giant, which makes chips used in about half the world's cell phones, earned $367 million in the first three months of 2004, compared with $117 million a year earlier. The company did not detail its profit-sharing payments in 2000, and representatives could not provide a figure for that year Wednesday.
The profits that will make the profit-sharing possible in 2004 are driven by the company's No. 1 or No. 2 position in each of its big communications markets, TI executives told the analysts, who applauded the company's performance.
Besides its leading position in cell phone chips, TI ranks among market leaders in chips for broadband modems, which include cable and DSL modems, and sells $10 to $20 worth of chips per camera to its customers who make digital still cameras.
Although many people likely think of calculators, memory chips and defense contracts when they think of TI, only the calculators remain, and they are overshadowed by the company's newer markets. The company sold its defense unit in 1997 and its memory chip business in 1998.
"We are in an era where communications and entertainment are driving technology" and likely will do so for the next decade, Templeton said.
TI is big in those markets, particularly in digital signal processors (DSPs) used in cellphones and the analog chips that are necessary to convert digital signals to the sounds and displays that are increasingly part of consumer devices.
"The more this world goes digital, the more analog components are needed," Templeton said. Analog chips accounted for $3.45 billion of TI's $9.8 billion in total revenues last year.
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(c) 2004, Fort Worth Star-Telegram, Texas. Distributed by Knight Ridder/Tribune Business News.
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