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Texas Instruments tops 2Q estimates, sees strong 3Q

    Texas Instruments slipped past analysts' estimates in its second quarter Monday, posting a profit of $525 million, or 31 cents a share, on sales of $2.84 billion.

    First Call Corp. consensus expected the maker of wireless communications chips to earn 30 cents a share in the quarter.

    Texas Instruments (NYSE: TXN) shares moved up 1/8 to 63 5/8 ahead of the earnings report.

    The $2.84 billion in sales represents a 19 percent improvement from the year-ago quarter when it earned $384 million, or 23 cents a share, on sales of $2.4 billion.

    Company officials also said it expects "accelerating growth" in its semiconductor business in the third quarter and will increase capital spending to meet the surging demand.

    "While we're beginning to harvest the gains from the divestiture of our memory business, we're also accelerating our growth through acquisitions," said CEO Tom Engibous in a prepared release. "Our catalog products are among our fastest-growing and most profitable, and (these acquisitions) expand our position into new high- performance areas."

    In late June, TI announced it would buy Burr-Brown (Nasdaq: BBRC) for $7.6 billion in stock. Company officials expect the deal to close in the third quarter.

    Burr-Brown designs data converters and amplifiers that use analog semiconductors to convert real-world sounds into the digital form computers can use and back again.

    Texas Instruments posted semiconductor sales of $2.41 billion in the second quarter, up 22 percent from the $1.98 billion it recorded in the year-ago quarter.

    Last quarter, TI hurdled Street estimates when it posted a profit of $470 million, or 55 cents a share, on sales of $2.65 billion.

    On Monday, Merrill Lynch analyst Joe Osha on Monday reiterated his intermediate-term and long-term ``buy'' ratings on the stock ahead of the earnings report.

    "We know of no other competitor that offers handset makers a roadmap to high-bandwidth 3G devices that is as compelling as TI's,'' Osha wrote in a research note. ``The competitive threat from the ADI/Intel tie-up has yet to materialize, and although the Lucent/Motorola Starcore is a strong architecture, uptake of that product is still limited.''

    TI shares moved up to a 52-week high of 99 3/4 in March after falling to a low of 33 1/2 last July. The stock split 2-for-1 in May.

    First Call Corp. consensus expects Texas Instruments to earn $1.24 a share in the fiscal year.

    Twenty-eight of the 29 analysts following the stock rate it either a "buy" or "strong buy."