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Texas Instruments (TXN) Earnings Preview

 January 18, 2013 03:56 PM

(By Balachander) Texas Instruments Inc. (NASDAQ: TXN) is expected to post lower fourth-quarter earnings and revenue as macro-economic concerns continue to mute growth and recovery in the semiconductor sector.

Wall Street analysts, on average, expect the chip maker's earnings per share (EPS) to drop 29 percent to 34 cents and revenue to decline 13.80 percent to $2.95 billion for the quarter ended December.

Dallas-based Texas Instruments is due to report its quarterly results on Jan.22.

Last month, the company narrowed its fourth quarter revenue outlook around the midpoint—in line with consensus at $2.95 billion while narrowing EPS guidance to 7 cents versus the prior 27 cents to account for charges associated with the restructuring of the Wireless business.

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Texas Instruments, or TI, appears to be seeing continued broad-based weakness across most of its business. The computing, communications and industrial end markets were characterized as generally weak, with consumer and automotive described as mixed.

The company's higher margin analog businesses are driving growth. However, its decision in September 2012 to end investment in the wireless smartphone/tablet business is likely to present a material headwind to sales over the next 18-24 months.

TI is likely too broad/diverse to overcome near-term macro sluggishness despite the company is positioned for long-term success in core analog/ embedded.

For the full year, the company is expected to earn $1.62 a share on revenue fall of 6.90 percent to $12.79 billion.

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During the last month, six analysts have recommended TXN as "Strong Buy" and six analysts gave "Buy" rating,  while 24 analysts gave "Hold" rating on the stock. There is no analyst to recommend "Sell" on the stock.

In the preceding third quarter, the company posted posted mixed quarterly results. EPS increased 31 percent to 67 cents and included 7 cents of charges related to TXN's acquisition of National Semiconductor. EPS also includes a benefit of 22 cents for changes in taxes and a Japanese pension program. Revenue declined 2 percent to $3.39 billion.

On a sequential basis, the company's earnings and revenue rose 5 percent and 2 percent, respectively for the third quarter.

The stock has been trading in the 52-week range of $26.06 to $34.24.

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