Texas Instruments hits 3Q targets, sees flat 4Q

Texas Instruments met analysts' estimates in its third quarter Wednesday, earning $591 million, or 33 cents a share, on sales of $3.16 billion.

First Call Corp. consensus expected TI to earn 33 cents a share in the quarter.

Texas Instruments (NYSE: TXN) shares closed off $3.31 to $36.88 ahead of the earnings report.

The $3.16 billion in sales marks a 25 percent improvement from the year-ago quarter when it earned $453 million, or 26 cents a share, on sales of $2.52 billion.

Company officials said its semiconductor sales jumped to $2.72 billion in the quarter, up 29 percent from the $2.1 billion it recorded in the year-ago quarter.

"DSP and analog are the core semiconductor drivers of a diverse mix of Internet-age applications," said CEO Tom Engibous in a prepared release. "Our growth in wireless handsets is now being complemented by growth in an array of communications infrastructure equipment that use our catalog DSP and analog products."

Wireless sales jumped 37 percent from the year-ago quarter while broadband communications sales improved 70 percent sequentially.

Catalog sales rose 56 percent from the third quarter of last year.

Pro forma operating margin was 23.7 percent, up 2.9 points from 20.8 percent in the year-ago quarter.

Looking ahead, TI officials said fourth-quarter sales will only improve a few percentage points from the third quarter.

It expects wireless sales will decline sequentially as certain major handset customers absorb semiconductor inventory in the fourth quarter, more than offsetting the continuing revenue growth in chipset and base-station products.

Sales from catalog DSP and analog products are expected to grow as a result of new applications, new product introductions and increased demand for existing products.

Last quarter, TI raked in $525 million, or 31 cents a share, on sales of $2.84 billion.

Its shares peaked at $99.75 in March after falling to a low of $37.88 last October.

Twenty-seven of the 28 analysts following the stock rate it either a "buy" or "strong buy."

Analysts are forecasting a profit of $1.28 a share in the fiscal year.