Texas Instruments Earnings Exceed Estimates, But Moderate Outlook Hurts Shares

The company posted second-quarter net income of $ 1.93 billion, or $ 2.05 per share, from $ 1.38 billion, or $ 1.48 per share, a year ago. Revenue jumped to $ 4.58 billion from $ 3.24 billion in the quarter last year.

Analysts polled by FactSet had forecast earnings of $ 1.83 per share on revenue of $ 4.36 billion, based on the company’s outlook of $ 1.68 to $ 1.92 per share on earnings of $ 4.13 to $ 4.47 billion.

The revenue gains in the second quarter were “due to strong demand in the industrial, automotive and personal electronics sectors,” Rich Templeton, president and CEO of Texas Instruments, said in a statement.

Last year, Texas Instruments reported an 11% drop in second-quarter revenue year-over-year. From there, revenue grew 1% year-on-year in the third quarter of 2020, followed by a gain of 22% in the fourth quarter, and then a gain of 28% in the first quarter of 2021. After a gain of 41 % in the – ended the second quarter, the company’s outlook for the third quarter is for a 25% increase, at best.

In a conference call, David Pahl, head of investor relations at Texas Instruments, told analysts that it was difficult to predict further demand and that normal seasonal trends for the third quarter “may not be the best way to look at things in times like this ”.

“Certainly the last few quarters, we would all agree, have been unusual times that we’ve been through and continue to go through,” Pahl said on the call. “The last few quarters have been exceptionally strong. “

Texas Instruments is a leading supplier of automotive electronic chips and components, one of the end markets hardest hit by the global chip shortage triggered by COVID-19.

“The second quarter has certainly been strong, both sequentially and year over year,” Pahl said. “So if you look at our forecast, that suggests the next quarter will again be a very good quarter.”

“I know there is a lot of speculation about how long the high demand will last, and we’ve certainly read the ranges that say it will end soon, and others that say it will continue for a while. time, “Pahl told analysts. “We’re not going to forecast the fourth quarter or even comment on the cycle length because honestly, as you know, we don’t know. I don’t think anyone knows.

Read: Chip crunch continues, but one sector could be in reserve

Texas Instruments shares were down 4% after-hours, after rising 3.5% in the regular session to close at $ 194.24.

For the automotive industry, the company manufactures components that power not only advanced driver assistance systems and touch screens, but virtually every other aspect of a modern automobile’s function, from wireless input systems. key to items such as lights and air conditioning systems.

While Texas Instruments does not specifically break down automotive product sales, the automotive industry uses components from the company’s analog and on-board processor categories. Sales of analog electronics, which convert real-world data such as sound or temperature into digital data, jumped 42% to $ 3.46 billion from a year earlier, as analysts had expected $ 3.33 billion. Sales of on-board processors, which take that digital data and use it to perform specific tasks, also jumped 43% to $ 780 million, with analysts expecting $ 753.1 million.

In the past 12 months, the Texas Instruments share price has risen 43%. In comparison, the S&P 500 SPX index,
+ 0.82%
is up 34%, the Nasdaq Composite Index COMP, with a strong technological component,
+ 0.92%
rose 37%, while the PHLX Semiconductor Index SOX,
+ 3.06%
jumped 57%.