Tech Industry

TI reports higher profit, sees broad chip demand

The company reports a higher quarterly profit, as strong sales of chips for products like televisions offset an expected decline in revenue for wireless products.

Texas Instruments on Wednesday reported a higher quarterly profit, as strong sales of chips for products like televisions offset an expected decline in revenue for wireless products.

The results from the world's largest maker of chips for cell phones calmed investor fears about a sales shortfall last week at top customer Nokia, and TI's stock rose about 2 percent in after-hours trade.

The Dallas-based company reported a three-fold increase in first-quarter net profit and higher sales.

It also said it would add production capacity, boost planned capital spending and increase spending on research and development in response to continued strong chip demand it forecast for the remainder of the year.

"Our portfolio is very broad-based and we're seeing this demand across the portfolio," said Kevin March, chief financial officer of TI. He said orders outpaced revenue in the semiconductor unit by 9 percent in the first quarter, a sign of ongoing demand.

TI is a widely watched gauge of the technology industry's health, given its size and the broad range of products--from mobile phones to TVs to cameras to calculators--that rely on TI's products.

Last week's sales shortfall at phone maker Nokia had sparked some investor concern that TI's first-quarter results and second-quarter outlook would be affected.

"I thought (TI's results and outlook) were pretty good, considering how skittish people were about Nokia last week," Loop Capital Markets analyst Ren Zamora said.

March said too much was made of the Nokia shortfall and its potential impact on TI.

"I think what people should begin to appreciate there is that our wireless business is more than just Nokia, and we've got a very broad base of both products and customers in there," March said.

TI posted a first-quarter net profit of $367 million, or 21 cents a share, compared with net income of $117 million, or 7 cents, a year earlier. Sales rose to $2.94 billion from $2.19 billion.

Analysts surveyed by Reuters Research, a unit of Reuters Group, had expected earnings per share on average of 21 cents on revenue of $2.89 billion.

For the current quarter, the company forecast revenue of $3.09 billion to $3.33 billion and earnings per share of 23 cents to 26 cents.

Analysts had been expecting second-quarter earnings per share of 20 cents to 27 cents, with an average estimate of 23 cents, on revenue of $3.06 billion, according to Reuters Research.

The company also boosted its capital spending plan for the year to $1.3 billion from $1.1 billion.

Shares of TI rose to $29.20 after closing at $28.68 Wednesday on the New York Stock Exchange.

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