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TI sees second-quarter revenue growth
March 9, 2012 / 12:36 AM / 6 years ago

TI sees second-quarter revenue growth

NEW YORK (Reuters) - Texas Instruments (TXN.O) expects revenue growth to resume in the second quarter, signaling an end to the inventory correction that dogged the chip maker last year.

The prospect of a return to growth took the sting from TI’s warning on Thursday that it would miss its first-quarter financial targets due to weak demand for its wireless chips.

TI and its rivals had suffered in recent quarters from a slowdown in demand as manufacturers reduced chip inventories due to concerns that economic weakness could hurt demand.

But, besides wireless, TI’s head of investor relations Ron Slaymaker told analysts on a conference call, demand is strong in the rest of the company. In particular he cited strength in markets such as automotives and network infrastructure.

“We’ve also seen growth in orders returning. Backlog and visibility are improving. Lead times are short and we continue to believe that inventory at customers and distributors remains low, so we’re planning for sequential growth to resume starting in the second quarter,” Slaymaker told analysts.

Sanford Bernstein analyst Stacy Rasgon said the positive comments weighed more heavily on investors minds than the discussion about wireless weakness.

“That’s a good set up for a snap-back in demand,” he said.

TI said in January that it expected the inventory correction to end this quarter if it had not already ended in the fourth quarter. Its Chief Executive Richard Templeton told investors last month that he expected a ”sharp snap-back in demand once the correction was over. <ID:L2E8DEASV>

Another chipmaker Altera ALTR.O warned on Thursday that its first-quarter revenue could be at the low end of its previous expectation as its customers were still adjusting inventories.

WIRELESS SHORTFALL

TI said that the wireless shortfall in the first quarter was mostly the result of weak demand for TI’s OMAP wireless application chips from smartphone and tablet computer customers that had over-ordered in the fourth quarter.

Analysts speculated that the Kindle Fire from Amazon.com (AMZN.O) was a key factor in the weak OMAP demand as Amazon may have had trouble estimating how many chips it would need for the new tablet computer.

In smartphones, Rasgon noted that growth at Apple Inc (AAPL.O), which does not use TI’s OMAP chip in its iPhone, had trumped other phone makers in the fourth quarter, and that its rivals were likely suffering the after-effects this quarter.

Another growing smartphone maker, Samsung Electronics (005930.KS) does not use TI’s OMAP chips, Rasgon noted.

TI, forecast first-quarter earnings per share in a range of 15 cents to 19 cents per share, below its previously announced target range of 16 cents to 24 cents per share.

It said its first-quarter revenue would range from $2.99 billion to $3.11 billion, compared with its earlier target of $3.02 billion to $3.28 billion.

The guidance missed estimates from Wall Street analysts who had expected earnings of 21 cents per share on revenue of $3.16 billion, according to Thomson Reuters I/B/E/S.

TI shares snapped back to $32.59 in late trade after Slaymaker’s comments. The stock had initially fallen to $32 in after-hours trading after closing at $32.60 on Nasdaq.

Reporting by Sinead Carew in New York and Noel Randewich in San Francisco editing by Carol Bishopric

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