Texas Instruments’ 4Q forecast surpasses expectations as chip maker reports 3Q profit decline

Texas Instruments 3Q profit, sales decline

NEW YORK — Texas Instruments’ third-quarter profit and sales Monday inched past the improved expectations the chip maker issued last month, and its largest division, which makes analog chips used in digital music players and other gadgets, saw 20 percent growth for the second quarter in a row.

The Dallas company also forecast results above Wall Street expectations, and its stock rose more than 2 percent in after-hours trading.

Texas Instruments Inc.’s results come amid signs in the technology industry that a recovery may be on its way. Earlier Monday, Gartner Inc. said technology spending is expected to return to growth in 2010 after a dismal 2009. Even so, the market will not recover to 2008 revenue levels before 2012, according to Gartner.

Ron Slaymaker, vice president of investor relations, told the Associated Press the company has seen improvement in both of the past two quarters. Though he said he doesn’t want to wave too much of a flag that “everything is off to the races,” business has been improving since hitting bottom in the first quarter of this year.

The company said it earned $538 million, or 42 cents per share, during the quarter, down 4 percent from $563 million, or 43 cents a share, a year earlier.

Sales fell 15 percent to $2.88 billion from $3.39 billion amid the economic downturn that’s hurt chip demand across the board.

The results surpassed the company’s September forecast and topped analysts’ expectations. According to Thomson Reuters, analysts were expecting earnings of 39 cents per share on sales of $2.82 billion.

“We are encouraged with the strong sequential increase in demand for our products over the past two quarters as our customers are winding down their inventory corrections and have begun to increase production levels in their factories,” said Rich Templeton, TI’s chairman, president and CEO, in a statement.

Demand was strong in products such as hard disk drives, wireless handsets, as well as consumer products like video game consoles and personal navigation devices, Slaymaker said.

For the current quarter, Texas Instruments forecast earnings between 42 cents and 50 cents per share — above the 40 cents per share that analysts are predicting.

The company forecast sales of $2.78 billion to $3.02 billion, compared with Wall Street’s estimates of $2.78 billion.

Shares climbed 56 cents, or 2.4 percent, to $24.08 in after-hours trading. The stock had closed up 77 cents, or 3.4 percent, at $23.52 in the regular session.