Texas Instruments Issues Strong Guidance Boosted by Auto, Industrial Demand

By Ezequiel Minaya

Texas Instruments Inc. said Monday that demand in the automotive, industrial and communications sectors helped the chip maker post revenue and profit in the upper range of its estimates and issue strong guidance for the current quarter.

Shares, up 35% over the past 12 months, rose 5.8% to $70.04 in after-hours trading.

For the current quarter, TI sees revenue in the range of $3.3 billion to $3.6 billion with earnings on a per-share basis between 81 cents and 91 cents. Analysts surveyed by Thomson Reuters expect earnings of 81 cents a share on revenue of $3.4 billion.

"Compared with a year ago, demand for our products continued to be strong in the automotive market, and grew in the industrial and communications equipment markets," said Rich Templeton, chief executive of the company. "Despite sequential growth, demand in the personal electronics market was down from a year ago."

The Dallas-based company is among suppliers for Apple Inc. TI, which makes chips used in everything from cellphones to industrial equipment, has focused on analog chips, which have a high-profit margin, and embedded processors, the "brains" of many electronic devices from electric toothbrushes to driver-assistance systems in autos.

Analysts for RBC Capital Markets believe headwinds could pick up in the second half of the year. Among other reasons, the analysts see possible weakness in auto and industrial markets, which have so far boosted the company's results.

"Over the past 5-10 years, acceleration in electronic content in the auto and industrial end markets has maintained analog semiconductor unit growth," the RBC analysts said in a research note Friday. "A slowdown or pause in the growth rates of semiconductor content in these end markets could reduce top-line growth at analog companies."

In the latest period, sales of analog chips were flat at $2 billion, while sales of embedded processors improved 9%, to $755 million.

Over all, TI reported a profit of $779 million, or 76 cents a share, compared with $696 million, or 65 cents a share, a year earlier.

Revenue climbed 1.2%, to $3.3 billion

TI had projected second-quarter profit of 67 cents to 77 cents a share on $3.07 billion to $3.33 billion in revenue, compared with analysts' projected 72 cents a share on $3.2 billion in revenue, according to Thomson Reuters.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com

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July 25, 2016 17:53 ET (21:53 GMT)

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