Home » Thurston County Primed for Business

Thurston County Primed for Business

Texas Instruments Inc., the largest analog chipmaker, said fourth-quarter profit rose 44 percent, boosted by demand for smartphones and network gear. Shares fell as an inventory buildup raised concern orders may trail off.

Net income rose to $942 million, or 78 cents a share, from $655 million, or 52 cents, a year earlier, the Dallas-based company said today in a statement. Sales climbed 17 percent to $3.53 billion.

Texas Instruments is the biggest maker of analog chips, which go into everything from weapons-guidance systems to kidney-dialysis machines. Even as sales were boosted last quarter by demand for smartphones and networking equipment, the company increased stockpiles of unsold chips and reported that orders slipped.

“People are generally worried about inventory now,” said Steve Smigie, an analyst at Raymond James & Associates Inc. who rates the shares “outperform” and doesn’t own any. The fourth- quarter “numbers are generally good,” he said.

Texas Instruments fell 2.3 percent to $33.86 in late trading after rising 2.2 percent, to $34.65 today on the New York Stock Exchange. The shares have advanced 6.6 percent this year.

Inventory rose by $318 million to $1.52 billion from a year earlier, and was up $96 million from the third quarter, the company said. Orders were $3.13 billion, down 4 percent from a year earlier and 9 percent from the third quarter.

Rebuilding Stockpiles

“We’ve been trying to build inventory and have been for some time,” Chief Financial Officer Kevin March said today in a telephone interview. Orders have declined because customers are less concerned they won’t be able to get parts on time now that Texas Instruments has increased its stockpiles, he said.

March said the resumption of growth in shipments of the company’s power-management chips provides evidence that the personal computer industry has “bottomed.” Also, television- panel makers are telling Texas Instruments to expect more orders, he said.

First-quarter profit will be 54 cents to 62 cents a share, the company said. That compares with the 57-cent average of estimates compiled by Bloomberg. Sales will be $3.27 billion to $3.55 billion. Analysts predicted $3.33 billion on average.

While demand from computer and TV makers was weak last quarter, purchases of smartphones and communications gear improved.

“Anything that touches handsets is doing well right now,” said Vernon Essi, a Boston-based analyst at Needham & Co. who recommends buying the stock and doesn’t own shares himself. “Industrial demand is the big question.”

Chief Executive Officer Rich Templeton is getting the company out of the market for digital signal processors that manage radio functions in mobile phones — an area Texas Instruments once dominated. He’s focusing instead on analog chips, where the company expects to win more orders and grow faster, Templeton has said. It also sells applications processors, which run programs in phones, and components for base stations.

Texas Instruments ranked third behind Santa Clara, California-based Intel Corp. and San Diego-based Qualcomm Inc. among U.S. chipmakers in total sales last year.

If you enjoyed this post, please consider subscribing to the RSS feed to have future articles delivered to your feed reader.