April 24, 2012 – PRNewswire — Texas Instruments Incorporated (TI, NASDAQ: TXN) announced first-quarter revenue of $3.12 billion, net income of $265 million and earnings per share of $0.22. EPS includes 10 cents of charges associated with the company’s acquisition of National Semiconductor and restructuring.
"As we expected, our business cycle bottomed in the first quarter, and early signs of growth began to emerge," said Rich Templeton, TI’s chairman, president and CEO. Orders increased 13% and TI’s backlog is growing. Orders increased across geographical regions and markets, Templeton added, including industrial. In 2010, TI ranked as the top industrial semiconductor supplier, according to IHS.
"Sales in our Analog segment were about level with the prior quarter. We continue to make progress with Silicon Valley Analog, formerly National Semiconductor, as this product line gains traction with customers and holds a strong position in the important industrial market. Sales in Embedded Processing were up 7% led by growth in the automotive and communications infrastructure markets. Sales in our Wireless segment declined sharply as we entered the final phase of our exit from baseband products, which were less than 3% of total sales in the quarter. We are expanding the reach of our Wireless segment into multiple markets and experiencing strong diversity in our design-ins.”
In March, TXN cut its Q1 forecast based on weakness in the wireless segment. The final earnings come in at the higher end of TI’s mid-quarter revision.
Analysts’ take:
FBR Capital Markets notes that inventory days grew by 21 to 108 days, likely "borrowing" from future fab utilizations and gross margin leverage upside. TI has done a good job of focusing on its analog core, building competitive barriers, and growing scale. That said, TI has built inventory ahead of demand (reducing some future margin leverage), and its wireless business seems challenged, FBR analysts conclude.
“1Q marks the bottom,” say Barclays Capital analysts. Customers have stopped reducing inventories, providing uplift in Q2 (though management is hesitant to suggest inventory replenishment is starting). TI is levered to the right end markets showing growth: auto, industrial, and communications infrastructure.