Although Texas Instruments reported better-than-expected fourth-quarter chip sales, the company will close older factories to cut costs.
Texas Instruments announced fourth-quarter revenue of
$3.42 billion, net income of $298 million and earnings
per share of 25 cents.
"Revenue in the fourth quarter was higher than
expected across all our major product lines,
reinforcing our belief that we're at the bottom of
this downturn. I'm pleased to say that despite the
downturn and the lower factory utilization that came
with it, cash flow from operations was strong and well
above levels as compared with similar points in prior
downturns. Our strategic focus on our core businesses
and efficient investment in capacity are key to our
strong generation of cash," said Rich Templeton,
chairman, president and chief executive officer. "As
we move into 2012, we enter the final phase of our
planned exit from the baseband market, and thus
further tighten our focus on Analog, Embedded
Processing and Wireless."
TI also announced plans to close two older
semiconductor manufacturing facilities in Hiji, Japan,
and Houston, Texas, over the course of the next 18
months. Production from these sites will be moved to
other more advanced TI facilities. Combined, these
factories supported about 4 percent of TI's revenue in
2011, and each employs about 500 people. "These sites
have made strong, high-quality contributions over the
30-plus years each has operated," said Templeton.
"They demonstrate the tremendous cash flow potential
associated with analog products, where factory lives
are literally measured in decades. However, we're now
at the point where each of these sites requires
significant upgrades, and it makes financial sense to
shift production to larger, more advanced facilities."
TI's revenue fell to $3.42 billion from $3.53 billion.
TI had warned December 8 that chip demand was weak,
forecasting quarterly earnings per share in a range of
21 to 25 cents on revenue of $3.19 billion to $3.33
billion. But March said that orders started to improve
right away after the December warning.
Revenue from the baseband business, whose main
customer is Nokia, will fall to about $75 million this
quarter from $279 million in the fourth quarter, said
Chief Financial Officer Kevin March.
Excluding the decline in baseband revenue, he said
TI's first-quarter revenue would have fallen 2 percent
from the fourth quarter, compared with the more
typical sequential decline of 4 percent.