Ahead of the Bell: Texas Instruments

AP News
Posted: Dec 09, 2009 8:10 AM

Analysts reaction to Texas Instruments Inc.'s increased fourth-quarter guidance was positive Wednesday morning, though one noted the magnitude of the forecast "met expectations," and shares inched lower in premarket trading.

The analyst, Ross Seymore of Deutsche Bank, said in a note to investor he expects stock price reaction to be "muted." He kept a "Hold" rating on the shares.

Seymore added he remains impressed with the Texas Instruments' performance, but he is concerned that the company's earnings will peak earlier than its rivals as growth in its wireless and other segments will likely slow down in 2010.

The Dallas-based company cited an improving market for chips used in cell phones and other electronic gadgets like hard disk drives and video game consoles for its improved outlook. It expects to earn between 47 cents and 51 cents per share, up from a prior estimate of 42 cents to 50 cents per share. Analysts polled by Thomson Reuters are expecting 47 cents per share.

BMO Capital Markets analyst Ambrish E. Srivastava, who rates Texas Instruments "Outperform," said he was happy with the company's margins.

"Gross margin, while not experiencing the quarter-over-quarter change logged over the past few quarters, still moved up to an expected 52.7 (percent) versus 51.4 (percent) in the prior quarter," he said in a note to investors.

The company's operating expenses, he added, remain under control.

Shares fell 58 cents, or 2.2 percent, to $25.75 in premarket trading.