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Comms chips

Texas Instruments Reports Q3

DALLAS -- Texas Instruments Incorporated (NYSE:TXN) (TI) today reported third-quarter 2006 revenue of $3.76 billion. Revenue grew 2 percent compared with the second quarter, which included a $70 million royalty settlement, and increased 13 percent from the same quarter a year ago. The increases were primarily due to continued strong demand for the company's high-performance analog and DSP products.Earnings per share (EPS) from continuing operations were $0.45. Second- quarter EPS of $0.47 included a benefit of $0.03 from a sales tax refund and a benefit of $0.02 from a royalty settlement. EPS grew 25 percent from $0.36 in the year-ago quarter. EPS in each of these periods included an expense of $0.03 for stock-based compensation.

"The third quarter was one of the best in TI's history," said Rich Templeton, TI president and chief executive officer. "Our revenue once again set an all-time record as our share continued to climb in our core markets. Our strong gross and operating margins reflected the value of our product portfolio, rich in analog and DSP products.

"At the same time, orders declined, leading us to expect that fourth- quarter Semiconductor growth will be below the seasonal average. A couple of factors are influencing this. First, we believe customers have broadly replenished their own inventory and are confident in operating with lower backlog now that chip supply has improved. The second factor is wireless, where we expect that unit mix will be more weighted toward low-priced cell phones and inventory correction will continue in Japan. Even with a less- than-seasonal fourth quarter, we expect the growth rate of our Semiconductor business to be in the upper teens for the year," Templeton said.

"In the near term, we are managing inventory and tightening expenses. We have a responsive manufacturing model and we believe distributor inventory levels remain lean, both of which should serve us well. We are competing from a position of strength with leading products and with customers who are gaining share."

Texas Instruments Inc. (NYSE: TXN)

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