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Texas Instruments Profit Rises 34 Percent ! - 1/24/2006 9:54:17 AM   

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Texas Instruments Inc. saw a 34 percent jump in quarterly income on strong sales of chips for mobile phones and electronic devices, but offered only a tepid outlook for the start of 2006.

Texas Instruments, the largest maker of chips for mobile phones, said it earned $655 million, or 40 cents per share, up from $490 million, or 28 cents per share, a year earlier.

The results included $17 million or 3 cents per share for stock-based compensation, which analysts typically exclude from their forecasts. Analysts were expecting TI to earn 42 cents per share in the October-December period, according to a Thomson Financial survey.

Revenue rose to $3.59 billion from $3.15 billion a year ago, Texas Instruments said. Analysts forecast sales of $3.64 billion.

Texas Instruments said it expects first-quarter sales of $3.11 billion to $3.38 billion — below analysts' forecast of $3.46 billion.

It is looking for earnings of 29 cents to 33 cents per share, not counting a sensors unit it is selling. Even adjusted to exclude 4 cents per share for stock-based compensation, that would be slightly below Wall Street's outlook for 38 cents per share.

In after-hours trading, TI shares slumped nearly 2 percent to $31.12.

Also Monday, the company announced its directors approved a $5 billion stock buyback.

Company officials argue they were on track for a decent first quarter after factoring a loss of 3 cents per share because of the expiration of a tax credit for research and development — which Congress could reinstate — and the loss of revenue due to sale of the sensors business.

"It's kind of a funny computation you've got to go through," but the company's outlook is actually very close to that of the analysts, said Chief Financial Officer Kevin March.

Cody Acree, an analyst with Stifel Nicolaus & Co., said the math was too complicated for many investors, who just saw a disappointing outlook for early 2006 and sold shares.

"There was a lack of obvious upside in the report," Acree said.

Although Texas Instruments beat Wall Street's forecast for the fourth quarter, that was only after the company lowered expectations several weeks ago.

Paul T. Leming, an analyst with Soleil-Princeton Tech, said investors were dismayed by the tepid first-quarter outlook after a relatively weak fourth quarter.

"It's the cumulative impact that has people saying, `Ho hum,' Leming said.

Vice President Ron Slaymaker said shipments of high-end analog chips used in consumer electronics were up 41 percent from a year earlier. He said the company increased its share of the market for the analog chips and digital signal processing chips used in a variety of consumer electronic devices.

Texas Instruments' gains in market share was in contrast with Intel Corp., which saw its stock tumble last week after officials conceded they had probably lost sales to a smaller rival, Advanced Micro Devices Inc.

TI officials also said they didn't see signs of the kind of inventory buildup that surfaced last year at this time. But analysts said inventories could rise quickly, hurting chip makers like TI, if consumers slow their pace of buying electronics gadgets.

For all of 2005, the Dallas company earned $2.32 billion or $1.39 per share, on revenue of $13.39 billion, compared to earnings of $1.86 billion or $1.05 per share on sales of $12.58 billion in 2004.

Source : YahooNews
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