Texas Instruments Q3 revenue down 14% year-on-year, expects sluggish demand to extend into Q4
Texas Instruments third-quarter revenue fell 14% year-on-year to $4.53 billion, compared with analysts' average estimate of $4.55 billion. Net income was $1.71 billion, compared with $2.3 billion a year earlier, and earnings per share were $1.85, compared with analysts' expectations of $1.82.
Looking ahead, the company expects fourth-quarter revenue to be in the range of $3.93 billion to $4.27 billion. This compares to the average analyst estimate of $4.49 billion. Earnings per share will be in the range of $1.35 to $1.57, compared to analysts' expectations of $1.76. According to analysts, the company's full-year revenue is expected to fall 10% this year, which would break a three-year streak of revenue growth.
This earnings guidance caused the stock to fall 4.71% after hours, which certainly bodes badly for the chip industry trying to recover from a severe slowdown. Texas Instruments has one of the broadest customer lists in the semiconductor industry, making its forecasts a bellwether for demand across the economy. The largest portion of the company's revenue comes from industrial machinery and automakers.
This year, chip investors have been expecting signs that electronics makers have worked through inventory buildups and are ready to increase orders again. However, they have been particularly pessimistic about Texas Instruments.
The earnings report also weighed on shares of other chipmakers. Adeno $Analog Devices(ADI.US$ was down 3% at one point after the bell, and ON Semiconductor $ON Semiconductor(ON.US$ was down 2.1% at one point.
Even so, Texas Instruments has slowed production at some of its factories to prevent too many idle parts. But Chief Financial Officer Rafael Lizardi said the plants' inability to operate at full capacity would hurt profitability and would require the company to take an expense in the current quarter.
Until this year, Texas Instruments has been a favorite of long-term investors, who have appreciated its commitment to returning cash to them in the form of dividends and share buybacks. Recently, however, the company has been investing in new plants aimed at increasing internal production. This could give the company an edge going forward, but is expected to impact free cash flow in the short term. $Texas Instruments(TXN.US$ $Texas Instruments(TXN.US$
Looking ahead, the company expects fourth-quarter revenue to be in the range of $3.93 billion to $4.27 billion. This compares to the average analyst estimate of $4.49 billion. Earnings per share will be in the range of $1.35 to $1.57, compared to analysts' expectations of $1.76. According to analysts, the company's full-year revenue is expected to fall 10% this year, which would break a three-year streak of revenue growth.
This earnings guidance caused the stock to fall 4.71% after hours, which certainly bodes badly for the chip industry trying to recover from a severe slowdown. Texas Instruments has one of the broadest customer lists in the semiconductor industry, making its forecasts a bellwether for demand across the economy. The largest portion of the company's revenue comes from industrial machinery and automakers.
This year, chip investors have been expecting signs that electronics makers have worked through inventory buildups and are ready to increase orders again. However, they have been particularly pessimistic about Texas Instruments.
The earnings report also weighed on shares of other chipmakers. Adeno $Analog Devices(ADI.US$ was down 3% at one point after the bell, and ON Semiconductor $ON Semiconductor(ON.US$ was down 2.1% at one point.
Even so, Texas Instruments has slowed production at some of its factories to prevent too many idle parts. But Chief Financial Officer Rafael Lizardi said the plants' inability to operate at full capacity would hurt profitability and would require the company to take an expense in the current quarter.
Until this year, Texas Instruments has been a favorite of long-term investors, who have appreciated its commitment to returning cash to them in the form of dividends and share buybacks. Recently, however, the company has been investing in new plants aimed at increasing internal production. This could give the company an edge going forward, but is expected to impact free cash flow in the short term. $Texas Instruments(TXN.US$ $Texas Instruments(TXN.US$
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