The company posted earnings of 41 cents per share on net income of $164 million on sales of $2.1 billion, compared to 60 cents per share in the year-ago quarter. Analysts expected the company to post earnings of 28 cents per share, according to First Call.
Shares of Texas Instruments jumped 4.35 percent to 63 on the earnings news. The stock has traded as high as 67.94 and as low as 39.63 during the past 52 weeks.
Texas Instruments said its earnings per share reflects a 26-cent-per-share loss due to its memory business. The company completed the sale of its memory business to Micron Technology on September 30.
Excluding its memory business, the company posted earnings of $267 million on sales of $1.9 billion, down 8 percent from the year-ago quarter.
The company added that while its performance was affected by weakness in the memory business and the overall semiconductor market, its digital signal processor, or DSP, business achieved 17 percent growth over the same period a year ago.
"This was an important quarter in the transition of Texas Instruments," the company's chairman, president, and CEO Tom Engibous said in a statement. "With the sale of the memory business now completed, we are focusing our attention full time on widening our lead in digital signal processing and analog.
"The strength of these areas, even during a period of protracted industry weakness, underscores the potential they offer [Texas Instrument] for the long term."
Despite continuing weakness in the world semiconductor market, Texas Instruments said it generally expects a stable performance from its ongoing semiconductor business in the fourth quarter of 1998.
The company said that markets for digital signal processing and analog continue to show a mixture of strength and weakness, with the wireless market continuing to grow at record levels. The general market weakness in modems and hard-disk drives continues, "reflecting overall semiconductor market and world economic conditions," the company said.
Although the company sees limited growth for its core businesses due to uncertain economic conditions, it remains positive about the long-term outlook for the digital signal processing and analog markets. Texas Instrument added that the semiconductor industry today is increasingly driven by a surge in digital connectivity that can be seen primarily in the wireless and networking areas. The company added that it believes the resulting growth and development of new products and applications will fuel the company's growth.