Texas Instruments Shares Slide As It Makes Plans To Boost Capacity

A Texas Instruments Inc. TI-84 Plus CE graphing calculator, left, sits in a display cabinet at a facility of Cal-Comp Technology Philippines Inc.

Hannah Reyes Morales/Bloomberg

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Texas Instruments

shares fell in after-hours trading on Tuesday after the chipmaker posted third quarter financial results that were largely in line with Street expectations. The company also noted that it will be increasing its capital spending to boost capacity.

For the quarter, Texas Instruments (ticker: TXN) posted revenue of $4.6 billion, up 22% from a year earlier, and just a smidge below the Wall Street analyst consensus forecast of $4.6 billion. Profits were $2.07 a share, two cents above the Street consensus at $2.05 a share.

For the fourth quarter, the company is projecting revenue of $4.22 billion to $4.58 billion, which at the midpoint of the range would be slightly below the Street consensus forecast of $4.44 billion, with profits ranging from $1.83 to $2.17 a share, which at the midpoint of $2 a share would be a little above the old consensus at $1.93 a share.

In remarks prepared for its earnings call with analysts, the company noted that revenue was up 1% from the second quarter, reflecting growth of 2% in analog components but down 5% in embedded processors. On a year-over-year basis, the company said, analog was up 24% and embedded was up 13%.

On the topic of component shortages, Texas Instruments said that lead times for most products remain stable but that “hot spots continue to exist.” The company added that customers are being more selective in their “expedite requests.”

The company added that discussions with customers “confirm a high level of interest in our commitment to expanding our internal manufacturing capacity roadmap,” along with associated assembly and test expansion. “These investments to strengthen our manufacturing and technology competitive advantage will provide lower costs and greater control of our supply chain,” Texas Instruments said.

The company said capital expenditures will be higher on both an absolute and percentage of revenue basis as it adds capacity. 

The chipmaker said industrial market revenue was up 40% from a year ago, but down mid-single digits from the second quarter. Automotive sales were up more than 20% from a year ago, and higher from the last quarter. Personal electronics related sales were up low double-digits both over the last quarter and year-over-year, driven by demand for parts for mobile phones, tablets and laptops.

Texas Instruments shares are down 3.7%, trading around $189.60.

Write to Eric J. Savitz at eric.savitz@barrons.com

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