SAN FRANCISCO—Chip maker Texas Instruments Inc. Tuesday (Jan. 22) reported better than expected fourth quarter sales but offered a first quarter sales target that came in below analysts' estimates.
Executives from TI characterized market conditions as sluggish and said inventory levels at OEMs and distributors remain low.
"Visibility remains poor and it is difficult to predict our business trends with precision," said Ron Slaymaker, TI's vice president of investor relations, in a conference call with analysts following the fourth quarter report. "That said, we expect revenue in the first quarter to be seasonal except for those wireless mobile product lines that we are exiting."
TI has been phasing out its cellular baseband chip business for several years. The company also announced last year that it would no longer position its OMAP applications processor to compete for smartphone and tablet sockets, instead steering the product line toward embedded applications.
TI (Dallas) reported fourth quarter sales of $2.98 billion, down 12 percent from the third quarter and down 13 percent from the fourth quarter of 2011. TI reported a net income for the quarter of $264 million, or 23 cents per share, down 66 percent from the previous quarter and down 11 percent from the fourth quarter of 2011.
TI's fourth quarter sales exceeded consensus analysts' expectations of about $2.95 billion, according to Yahoo Finance. The company's non-GAAP earnings per share also exceeded consensus analysts' expectations.
"Revenue in the fourth quarter was in the upper half of our range of expectations," Slaymaker said. "We expected the environment to be weak again last quarter, and it was."
Sales declined each month during the quarter, Slaymaker said. But, orders and revenue have been up in January compared with December so far, he said. "So that leads us to an outlook that is a little stronger than the fourth quarter book-to-bill and orders might otherwise have suggested," Slaymaker said. The firm's book-to-bill ratio for the fourth quarter was 0.91, he said.
TI expects sales for the first quarter of this year to fall to between $2.69 billion and $2.91 billion, generally below analysts' estimates. Kevin March, TI's chief financial officer, said about 75 percent of the anticipated sales decline would be due to the continued wind down of TI's mobile baseband products.
For the full year 2012, TI reported sales of $12.83 billion, down 7 percent from 2011. The company's net income for the year, $1.76 billion, was down 21 percent from 2011.