Texas Instruments had no trouble beating Street estimates in its first quarter Monday, raking in $470 million, or 55 cents a share, on sales of $2.65 billion.
First Call consensus expected the world's largest manufacturer of chips used in mobile phones to earn 53 cents a share in the quarter.
Texas Instruments (NYSE: TXN) shares closed up 20 7/8, or 16 percent, to 152 1/2 ahead of the earnings report.
The $2.65 billion in sales marks a 27 percent improvement from the year-ago quarter when it earned $278 million, or 34 cents a share, on sales of $2.08 billion.
TI credited the upside surprise to surging demand for chips used in a variety of wireless communication devices.
Company officials also reiterated their forecast of reaching a pro forma operating margin of 25 percent by year's end.
"For the year 2000, TI expects robust growth to continue in its semiconductor business, driven by strength in communications end-equipment markets, including wireless and broadband, as well as continued strength in the mass market," TI said in its statement.
Semiconductors are the core of TI's business, mainly specialized chips called Digital Signal Processors. Such chips are the heart of wireless and Internet connection technology, converting sounds and images into the digital information that computers use.
DSPs and analog chips used in a range of new technology account for about 60 percent of TI's semiconductor revenues, which rose 30 percent in the first quarter from the year earlier to $2.27 billion.
TI also said the growing demand for its DSP and analog products had prompted it to raise its capital expenditure plans for the year to $2.5 billion, a move that will hold back profits but allow increased capacity and higher sales.
Last quarter, TI delivered better-than-expected earnings of $433 million, or 51 cents a share, on sales of $2.55 billion.
Its shares moved up to a 52-week high of 199 9/16 in March after slumping to a low of 49 1/2 last April.
Twenty-nine of the 34 analysts covering the stock rate it either a "buy" or "strong buy."
Analysts expect TI to post a profit of at least $2.39 a share in the fiscal year.