Texas Instruments Inc (TXN.O) posted first-quarter results slightly ahead of Wall Street expectations and it forecast growth for the current quarter on improving demand for its chips.
Following weak demand last year due to concerns about the global economy, orders for Texas Instruments' chips have picked up, although manufacturing customers remain cautious, Chief Financial Officer Kevin March told Reuters in a telephone interview.
Texas Instruments' book to bill ratio rose to 1.03 in the first quarter from 0.91 in the December quarter, he said, as the company built a backlog of orders.
"People generally remain quite careful with how much inventory they choose to carry as they kind of wait to read the tea leaves to see what the economy is really going to do," March said. He pointed to industrial and automotive as markets with solid demand.
As Texas Instruments winds down its low-margin wireless business, its analog and embedded chips contributed 77 percent of revenue in the March quarter, up five percentage points from the year-ago quarter.
In the June quarter, revenue from the legacy wireless business will decline about $60 million from the March quarter, Texas Instruments said.
TI, which sells chips for everything from personal computers to industrial equipment, reported net income of $362 million, or 32 cents a share compared with $265 million or 22 cents per diluted share in the year-ago quarter.
Analysts had expected earnings of 30 cents per share according to Thomson Reuters I/B/E/S.
"I don't think things are falling off a cliff. People are cautious. If you can get any part in six weeks why would you build inventory," said Sanford Bernstein analyst Stacy Rasgon.
TI's revenue fell to $2.885 billion from $3.12 billion in the year-ago quarter. Analysts on average expected first-quarter revenue of $2.852 billion, according to Thomson Reuters I/B/E/S.
It forecast second-quarter revenue between $2.93 billion and $3.17 billion. The midpoint of the range is $3.05 billion, slightly ahead of Wall Street expectations for $3.04 billion according to Thomson Reuters I/B/E/S.
It forecast second-quarter earnings per share of 37 cents to 45 cents.
TI shares fell 0.43 percent to $34.66 in late trade after closing up 1.6 percent at $34.81 in the regular Nasdaq session on Monday.
(Reporting by Noel Randewich in San Francisco and Sinead Carew in New York; Editing by Phil Berlowitz)