| SAN FRANCISCO
SAN FRANCISCO Texas Instruments Inc said it expects higher third-quarter revenue following recently improved demand for chips used in cars, industrial equipment and communications gear.
Chief Financial Officer Kevin March said the company's customers appeared to be holding lean inventories of chips, which should help maintain demand.
"Things look to be OK, markets seem to be OK," March said in an interview. "We don't see signs of any inventory that customers are holding beyond what they need."
Since 2012, Texas Instruments has been winding down its wireless business, which faced stiff competition from Qualcomm Inc, to focus on more profitable embedded and analog chips.
That strategy, along with buying manufacturing on the cheap following the global financial crisis, is paying off, Ascendiant Capital Markets analyst Cody Acree said, pointing to the chipmaker's record 57 percent gross margin in the June quarter.
"Analog and embedded are really stable, predicable segments. They're global economic proxies, so you’re not worried about the next iPhone or Samsung Galaxy," Acree said.
TI said on Monday its second-quarter revenue was $3.29 billion, up 8 percent from the year-ago period. The Dallas, Texas-based company forecast third-quarter revenue of $3.31 billion to $3.59 billion. The mid-point of TI's revenue guidance is about $3.45 billion.
Analysts on average had expected revenue of $3.27 billion for the second quarter and $3.44 billion for the third quarter, according to Thomson Reuters I/B/E/S.
Second-quarter net income rose 3 percent to $683 million. It earned 62 cents per share, versus 59 cents expected by analysts.
The chipmaker said its third-quarter earnings per share would range from 66 cents to 76 cents.
Shares of TI slipped 0.55 percent in extended trade after closing up 0.72 percent at $49.17 on Nasdaq.
(Reporting by Noel Randewich; Editing by Richard Chang)