Texas Instruments Forecast Signs Chip Slump Is Persistent.
(Bloomberg) — Texas Instruments Inc. Still, it gave a pessimistic revenue forecast for the time being, hurt by sluggish chip demand and high manufacturing costs.
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Profit will be 94 cents to $1.16 a share in the first quarter, the company said in a statement Thursday. The midpoint of that range, $1.05 a share, was below analysts’ average estimate of $1.17. Sales will be between $3.74 billion and $4.06 billion, compared to estimates of $3.86 billion.
Much of the electronics industry remains mired in recession — contributing to nine straight quarters of sales declines at the company. Manufacturing costs also hurt profits, Texas Instruments executives said.
Texas Instruments accounts for the largest share of sales from manufacturers of industrial equipment and vehicles, making the forecast a bellwether for much of the global economy. Three months ago, executives said some of the company’s end markets were showing signs of being out of inventory, but the turnaround was not as rapid as some investors had hoped.
The company’s shares fell about 3 percent in extended trading following the announcement. They have gained about 7% this year by the close of regular trading.
CEO Haviv Ilan said Thursday that industry demand is sluggish. “Industrial automation and energy infrastructure still haven’t hit the bottom,” he said on a conference call with analysts.
In the automotive segment, growth in China was not as strong as it used to be, meaning it could not offset expected weakness in other parts of the world.
While the company is seeing “points of strength,” Ilan said, “we haven’t seen the bottom yet – let me be clear.”
Contrary to pessimistic forecasts, Texas Instruments’ fourth-quarter results handily beat analysts’ estimates. Sales fell 1.7 percent to $4.01 billion, compared with analysts’ estimates of $3.86 billion. Earnings were $1.30 per share, compared with forecasts of $1.21 per share.
The Dallas-based company is the largest maker of chips that perform simple yet important functions in a variety of electronic devices. It is also the first major US chipmaker to report numbers for the current earnings season.
The company’s chief financial officer, Rafael Lizardi, said during the call that the company is operating some plants at less than full capacity to reduce inventory levels. This is resulting in profits.