Earnings Preview: Texas Instruments

Jul.25.11 | About: Texas Instruments (TXN)

Texas Instruments (NYSE:TXN) is expected to report Q2 earnings after the market close on Monday, July 25, with a conference call scheduled for 5:30 pm ET.


The consensus estimate is 53c for EPS and $3.44B for revenue, according to First Call. Recall that Texas Instruments had lowered Q2 guidance for a second time at its mid-quarter update on June 8. TI pegged the lower Q2 guidance on slow demand from Nokia (NYSE:NOK), which was 19% of 2010 revenues, and disruptions due to the Japan earthquake. EPS for Q2 is forecast at 51c-55c on revenue of $3.36B-$3.50B. Management also said, "The automotive market remained mixed as Japanese automakers were still suffering from disruption due to the earthquake." TI said, “Had it not been for Japan, we had robust expectations for Q2. Despite this, order trends are tracking closely to expectations coming into the quarter." They says the Japan supply constraints being resolved in 2H of 2011 for a strong end of the year. They also expected to track well above the market in their core businesses in 2H of 2011.

Analyst Views

Looking forward, Deutsche Bank expects an in-line Q3, but does not that downside risk exists on wireless/inventory. For Q3, DB is modeling rev/EPS of $3.63B/61c vs. Street at $3.62B/64c. DB’s +6% revenue growth estimate is above typical seasonality of +4% q/q due to a partial snap-back in Japan-related business - Japan was 10% of TXN's 2010 revenue. DB says, a possible offset to the Japan dynamic is the risk of further wireless weakness from Nokia, and inventory burn. Key Focus Items:1) update on National Semi acquisition, 2) Japan update, 3) Wireless trends and strategic options, 4) Analog market share gains, 5) GM/OM trends, and 6) Inventory levels.