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Message subject : TI earnings beat estimate
This message was posted by mango on April 17, 2000 :
Leading semiconductor maker reports 69 percent increase in net income
April 17, 2000: 6:28 p.m. ET
NEW YORK (CNNfn) - Semiconductor giant Texas Instruments Inc. reported first-quarter net income that exceeded analysts' estimates, driven by strong sales of chips used in cellular phones and Internet access equipment.
The Dallas-based company reported that its first-quarter net income rose 69 percent to $470 million, from $278 million in the same period last year. On a per share basis, its net income rose 62 percent to 55 cents, versus 34 cents in last year's first quarter. The mean analyst expectation for the quarter was 53 cents, according to earnings tracker First Call.
The first-quarter income numbers for this year don't include $29 million of one-time charges and $25 million of intangible items related to acquisitions. Excluding those items, TI's operating margin for the first quarter was 21.7 percent, up 5.4 percentage points from 16.3 percent in the year-ago quarter as a result of increased product shipments.
TI's revenue rose 27 percent to $2.65 billion from $2.08 billion. Revenue from its semiconductor segment rose 30 percent to $2.27 billion, from $1.74 billion in the same quarter of 1999.
TI (TXN: Research, Estimates) is the world's leading designer and supplier of digital signal processors (DSPs) and analog integrated circuits. These two semiconductor products are used in digital cellular phones and high-speed Internet access devices, among other applications.
"This is a good start to 2000," said Tom Engibous, TI's chairman and CEO. "Internet and communications applications continued to be our largest growth drivers, reinforcing the importance of programmable DSPs and analog products to the Internet age."
In the first quarter, TI started high-volume production of DSPs for broadband applications. The company has a 48 percent share of the programmable DSP market, more than its two nearest competitors, Lucent Technologies Inc. (LU: Research, Estimates) and Motorola Inc. (MOT: Research, Estimates), combined. The use of DSPs is projected to grow 30 percent a year, with the market growing from $4 billion in 1999 to $13 billion in 2003, driven by the explosive growth of cell phone use and the Internet.
TI sees second quarter revenue growth
TI's orders in the first quarter rose 26 percent to $2.88 billion from $2.28 billion in the year-ago quarter and were up 5 percent from the fourth quarter, primarily because of strong demand for the company's semiconductors.
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TI said in its earnings report, released after the market closed Monday, that it expects "accelerating sequential revenue growth overall" in the second quarter, as it enters a seasonally stronger period in all of its business segments, with the semiconductor segment driving most of the growth.
The company said that revenue from chips for wireless phones and broadband Internet access equipment is expected to accelerate in the second quarter, but revenue from chips used to control hard disk drives is expected to decline in the period.
For the year 2000, TI said it expects "robust growth" to continue in its semiconductor business, driven by strength in communications equipment markets, including wireless and broadband. By the end of the fourth quarter, TI expects its operating margin to reach 25 percent, not including one-time charges and the amortization of goodwill.
Additionally, TI raised its capital expenditure forecast for the year to $2.5 billion from $2 billion previously, reflecting the company's expectation that there will be continued strong demand for its DSP and analog products. TI said it plans to spend $1.5 billion on research and design in 2000.
TI's stock surged 20-3/8 to close at 152 Monday, before the earnings were released. The company's shares are more than triple their 52-week low of 49-1/2.
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