Earnings Preview: Texas Instruments

Texas Instruments (TXN) is expected to report Q1 earnings Monday after market close, with a conference call scheduled for 5:30 pm EDT Monday (April 21).

Guidance

The consensus estimate is 43c for EPS and $3.28B for revenue, according to First Call. Last month, TI said it expected revenue between $3.21B and $3.35B, compared with its previous range of $3.27B to $3.55B. The company also dropped its midpoint target, to $3.28B from $3.41B. In addition, TI trimmed its forecast for EPS to a range of 41c to 45c, compared with its previous prediction of 43c to 49c. The midpoint for its earnings per share target was cut to 43c from 46c. The lowered guidance enforced Wall Street's concerns that the chip giant was starting to feel the pain of a slowing economy.

Analyst Views

Caris described TI as "a quality stock" but one that is "not immune to macro concerns." The firm expects Texas Instruments to weather the ongoing economic storm better than most, but continue to recommend that investors avoid putting new money to work in TI and in the semiconductor space in general. TI's dominant position in the cell-phone chip market has faced new challenges after its biggest customer, Nokia (NOK), decided to work with other suppliers such as Broadcom (BRCM) and STMicroelectronics NV (STM). Another major customer, Ericsson LM (ERICY), also has shifted to a multi-supplier strategy.

Shares of TI took a hit yesterday after Nokia reported a lower-than-expected increase in Q1 profit.

Key Issues

Key issues for the conference call: forward guidance, commentary on the impact of the macro economic environment, and comments regarding TI's positioning with its customers.