February 4, 2023

As Texas Instruments predicted, auto-chip sales are the only bright spot, and shares are calm

A previous version of this report incorrectly stated FactSet estimates for fourth-quarter earnings.

Texas Instruments Inc. shares were relatively placid in the extended session Tuesday after the analog chip maker’s earnings topped low expectations, and offered an outlook that stretched against analysts’ expectations.

Shares of Texas Instruments

were down 1% in after-hours trading, following a 0.7% decline in the regular session to close at $177.04, and a 0.7% decline in the PHLX Semiconductor Index

and a virtually flat S&P 500 index

For the fourth quarter, the company posted net income of $1.96 billion, or $2.13 a share, compared with $2.14 billion, or $2.27 a share, in the year-ago period.

Revenue declined to $4.76 billion from $4.83 billion in the year-ago quarter, the company said.

Analysts surveyed by FactSet had estimated earnings of $1.98 a share on revenue of $4.61 billion.

Read: The PC industry just suffered its worst decline on record, again

Last quarter, it appeared as if auto-chip sales had become the sole growth driver in the analog chip segment, after the company focused on its long-term capacity buildout, amid a weak outlook for fourth-quarter earnings.

And that came to fruition as Rich Templeton, Texas Instruments’ chairman and chief executive, summed up in a statement.

“As we expected, our results reflect weaker demand in all end markets, with the exception of automotive,” Templeton said.

Read: PC market in ‘steepest’ fall since data started being collected in mid-1990s, analysts agree

The company expects first-quarter earnings between $1.64 and $1.90 a share on revenue of $4.17 billion to $4.53 billion, while analysts surveyed by FactSet, on average, had forecast earnings of $1.86 a share on revenue of $4.41 billion. The company reported first-quarter earnings of $2.35 a share on revenue of $4.91 billion in 2022.

Unlike companies like Nvidia Corp.

and Advanced Micro Devices Inc.
Texas Instruments operates its own fabs.

Texas Instruments still ranks as one of the best-performing chip stocks over the past 12 months with a 1% loss, compared with a 16.3% drop by the SOX chip index, and an 8.9% decline by the S&P 500.

Read: Intel earnings will be more about the future than the past

Chipmaking-equipment manufacturer Lam Research Corp.

is scheduled to report its earnings on Wednesday after the bell, and then on Thursday comes KLA Corp.

and Intel Corp.

after the market’s close.

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