By Sinead Carew
NEW YORK, March 7 Texas Instruments
raised its targets for first-quarter earnings and revenue to the
upper end of its previous forecast ranges, due to improving
demand for its chips in an industry that has been hit for
several quarters by a weak global economy.
TI, a maker of chips for a wide array of products ranging
from computers to industrial equipment, said on Thursday that
chip orders were increasing and that it expects the trend to
While Ron Slaymaker, head of investor relations, said that
TI was still seeing weakness in sales of chips for notebook
computers and communications infrastructure, he cited a noted
improvement in orders from TI's industrial customers and
better-than-expected wireless chip sales.
Overall, Slaymaker said TI's chip order backlog was growing
for the first time in several quarters, and that it appeared to
come from improving demand from end-users rather than chip
inventory restocking at its customers.
"We're clearly expecting growth in the second quarter,"
Slaymaker told analysts on a conference call.
TI executives had spoken in bleaker tones after their
quarterly earnings report in January, citing customer wariness
about over ordering due to economic weakness in Europe and China
and uncertainty about U.S. government policies.
However, analysts were cautious about celebrating and TI's
shares fell slightly in late trade.
Bernstein analyst Stacy Rasgon said TI's comments about
strength in its industrial business were encouraging as was its
suggestion of improving customer demand that was unrelated to
changes in chip inventory levels.
"Those are good things and indicative that maybe things are
getting better," he said but added that it was not necessarily a
sign of a strong recovery for the broader semiconductor market.
"I'm not ready to jump on the economic recovery bandwagon
yet," Rasgon said. "It's modestly encouraging."
Freescale Semiconductor Ltd, a maker of chips for
cars and machinery, had also forecast current quarter revenue
that was better than expected in late January citing
improvements in its wireless and enterprise business.
While demand for chips used in tablets and handsets was
better than expected, Slaymaker noted that the company's revenue
from wireless would still decline in the first quarter as TI is
gradually shutting down its wireless chip business.
TI said it now expects first quarter earnings per share of
28 to 32 cents, compared with its previous target range of 24 to
32 cents and implying a new midpoint of 30 cents compared with
It forecast revenue in a range of $2.80 billion to $2.91
billion, which compared with its January forecast for a range of
$2.69 billion to $2.91 billion.
The $2.855 billion midpoint of the updated revenue range was
above Wall Street expectations for $2.8 billion, according to
Thomson Reuters I/B/E/S.
Williams Financial analyst Cody Acree said that the industry
was likely in the early stages of a broader improvement.
"While market signals continue to be mixed, we do believe TI
is one of the best vehicles for investors to participate in what
we believe to be the early stages of an improving semiconductor
cycle," Acree said in a research note.
TI shares were down slightly at $35.11 in after hours trade
after closing at $35.20 in the regular Nasdaq session. The stock
has risen 5 percent since Jan. 22 as investors have been betting
on an improvement in demand for TI.