SAN JOSE, Calif. Calling for flat capital spending in 2005, Texas Instruments Inc. on Tuesday (Jan. 25) also reported sales of $3.153 billion in the fourth quarter, down 3 percent sequentially but up 14 percent from the like period a year ago.
In the fourth quarter, net income was $490 million, or $0.28 per share. This compares to a net income of $563 million, or $0.32 per share, in the previous quarter and a profit of $512 million, or $0.29 a share, in the like period a year ago.
Thomson First Call was looking for TI (Dallas) to report earnings of 26 cents per share on sales of $3.095 billion in the latest quarter.
Orders of $2.944 billion decreased 2 percent sequentially, primarily due to seasonally lower demand for calculators. Compared with the year-ago quarter, TI orders decreased 4 percent due to lower demand for semiconductor products.
Semiconductor orders of $2.592 billion were about even sequentially. Semiconductor orders declined 6 percent from the year-ago quarter, primarily due to weak demand for standard products.
Semiconductor revenue in the fourth quarter of $2.798 billion was flat sequentially. Compared with the year-ago quarter, revenue increased 14 percent, primarily due to strong growth in the company's wireless and DLP product revenue.
Strong growth in products for the wireless market was offset by declines in other areas, primarily standard products reflecting continued inventory adjustments by distributors, according to TI.
"Analog revenue in the fourth quarter decreased 6 percent sequentially primarily due to lower shipments that resulted from weaker demand for standard products, including high-performance analog and commodity linear products, which are sold predominantly through distribution channels," according to TI. "DSP revenue in the fourth quarter increased 9 percent sequentially and 24 percent compared with the year-ago quarter due to higher shipments that resulted from stronger demand for wireless products."
"TI delivered excellent growth and improved profitability in 2004 despite a second half that was dampened by inventory adjustments," said Rich Templeton, president and chief executive officer, in a statement. "Most notable was our performance in wireless, DLP and high-performance analog products."
Templeton presented a mixed picture as well. "We believe distributors made good progress in reducing their inventories in the second half of 2004," he said. "Likewise, TI moved aggressively in the fourth quarter to decrease factory loadings, which reduced our inventory by $100 million. Although this put pressure on fourth-quarter margins, we are entering 2005 with desired levels of inventory inside TI, and as a result, we anticipate factory loadings will be higher in the current quarter than they were in the fourth," he said
"Although normal seasonality and lower backlog lead us to expect a decline in first-quarter revenue, we are encouraged by the momentum our products have with customers and the overall health of our markets, and we intend to be well-positioned for a resumption in growth," he added.
Inventory of $1.256 billion at the end of the fourth quarter decreased $100 million sequentially due to lower factory loadings. For the year, inventory increased by $272 million compared with the end of 2003 as the company built inventory to support higher shipment levels and to increase the company's performance in customer service metrics. Days of inventory at the end of the fourth quarter were 62, down from 69 days at the end of the prior quarter and up from 56 days at the end of 2003.
For the first quarter of 2005, TI expects revenue to be $2.900-to-$3.140 billion. Semiconductor sales are expected to range from $2.550-to-$2.750 billion. TI expects earnings per share to be in the range of $0.22-to-$0.26.
In 2004, capital expenditures were $1.298 billion. Capital expenditures are expected to be about $1.3 billion in 2005.