Texas Instruments raises 4Q profit, sales targets

AP News
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Posted: Dec 08, 2009 6:11 PM

Texas Instruments Inc. raised its fourth-quarter profit and sales outlook on Tuesday, citing an improving market for chips used in cell phones and other electronic gadgets like hard disk drives and video game consoles.

Dallas-based Texas Instruments now expects to earn between 47 cents and 51 cents per share, up from a prior estimate of 42 cents to 50 cents and above third-quarter earnings of 42 cents per share. In its regular mid-quarter update, the company also lifted its revenue forecast to between $2.90 billion and $3.02 billion from $2.78 billion to $3.02 billion, previously. That would mark sequential growth of 1 percent to 5 percent.

Analysts are expecting the company to earn 47 cents per share on sales of $2.93 billion, according to a Thomson Reuters poll. The midpoint of the company's revenue guidance would total $2.96 billion, slightly above Wall Street's average estimate.

On a conference call with analysts, Texas Instruments executives said the company has seen sharply increased demand in the last few quarter, and is working to address "bottlenecks in our operations," but noted that "supply definitely remains constrained currently."

Lead times for certain product categories had stretched into the high teens to 20 weeks, which always raises the spectre of cancellations, BMO Capital markets analyst Ambrish Srivastava had noted in a client report Monday. Other chipmakers, such as Nvidia Corp., also have experienced some supply constraints during the quarter, as their customers saw stronger than anticipated demand for their products.

Texas Instruments said October and November were both strong months, and the company is not seeing any signs of heightened cancellations at this point.

Despite the upgraded outlook, shares slid more than 2 percent in after-hours trading Tuesday, having earlier closed down 29 cents at $26.33.