Texas Instruments Inc., the world's top maker of microchips for cell phones, on Monday reported a fourth-quarter profit, reversing a year-earlier loss, and forecast current-quarter revenue above analysts' average estimate.
The Dallas-based company said the results and outlook reflect better sales for chips for products ranging from cell phones to televisions and a general recovery in the semiconductor industry after years of slack demand.
"The guidance for (the first quarter) was actually a little bit better than I thought it would be," said David Wu, an analyst at Wedbush Morgan Securities.
Sector rivals including Qualcomm Inc. and Motorola Inc. recently have given similarly optimistic outlooks, forecasting increased demand as carriers like Verizon Wireless and Sprint PCS Group expand new, high-speed networks and customers buy more phones with advanced features.
"Based upon order patterns we're seeing, it certainly indicates our customers want more product," Chief Financial Officer Kevin March told Reuters. "It certainly seems that all indications are more positive today than we have seen for quite a long time, since this downturn started."
Its shares, which hit a 52-week high two weeks ago, were down 1.5 percent in after-hours trade, following a recent trend seen in other technology stocks of selling off after the companies reported earnings.
The company, which raised its fourth-quarter forecast in December, posted a net profit of $512 million, or 29 cents per share. That compares with a loss of $589 million, or 34 cents per share, a year earlier, when it had a large investment write-down.
Revenue was $2.77 billion, compared with $2.15 billion a year earlier.
Excluding a 7-cent gain from the sale of Micron Technology Inc. shares and a 2-cent benefit from a lower estimated 2003 tax rate, the company had a profit of 20 cents per share. On that basis, analysts surveyed by Reuters Research, a unit of Reuters Group Plc, were expecting earnings per share of 19 cents on revenue of $2.72 billion.
TI forecast earnings in the range of 16 cents to 22 cents a share and revenue of $2.72 billion to $2.95 billion for the current quarter. Analysts had been expecting revenue of $2.69 billion and earnings per share of 17 cents.
For the year, the company forecast capital expenditures of $1.1 billion, up from $800 million in 2003.
"The outlook is the thing that most people are going to pay attention to and that was pretty much strong," said Ren Zamora, an analyst at Loop Capital Markets. "Everything I've seen here definitely is positive."
March said the company does not yet have a gross margin forecast for the full year, but said on a conference call that margin growth would be boosted primarily by higher pricing on commodity products and greater capacity utilization.
Shares in TI fell to $31.50 on the Island ECN after ending higher at $31.99 on the New York Stock Exchange.
Excluding the after-hours decline, the stock is up about 9 percent so far this year, alongside strong gains in wireless and technology sector stocks. The sector has been boosted by signs of a recovery in corporate and infrastructure spending.