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Texas Instruments Cuts Q4 Revenue And Earnings Forecast

Tyler Durden's picture


At this point saying Texas Instruments guides lower is about the most habitual thing about this broken market, aside from the traditional Fed-Citadel juiced 3 pm ramp, of course. Sure enough, moments ago the analog circuits company announced results which were modestly better on the bottom and top line (following repeated earnings guidance lower), and yet which did the usual TXN thing and slashed guidance:

  • SEES 4Q REV. $2.83B-$3.07B, , EST. $3.22B
  • TI SEES 4Q EPS 23C-31C, EST. 37C

Just a tad. And, amusingly just as we predicted moments ago that in a ZIRP environment CapEx will be the first thing let go, here is TXN announcing it is slashing its full year growth spending forecast by 30%:


Of course who needs to invest in future revenue growth when the Fed has toner. The market, which is back to responding in absolute bizarro fashion is taking the latest disappointment in short squeeze stride, and has even managed to push the stock higher in the after hours session.

From the release:

Texas Instruments Incorporated (TI) (TXN) today announced third-quarter revenue of $3.39 billion, net income of $784 million and earnings per share of 67 cents.  EPS includes 7 cents of charges associated with the company's acquisition of National Semiconductor and restructuring that were comprehended in TI's outlook provided in September.  EPS also includes a benefit of 22 cents for changes in taxes and a Japanese pension program that were not included in the company's outlook.

"TI revenue grew sequentially and operations were well executed even though the economy and semiconductor market remained weak and likely will get weaker in the fourth quarter," said Rich Templeton, TI's chairman, president and CEO.  "Our core businesses of Analog and Embedded Processing each grew revenue by 2 percent.  Our operations were disciplined, with expenses and inventory levels both down, and our core businesses grew profit faster than revenue."

Regarding TI's business model, which is focused on Analog and Embedded Processing, Templeton said, "These two core businesses now comprise 70 percent of our revenue.  The importance of this strategy shows in the strong cash that we generate even in weak markets and in our ability to return that cash to shareholders.  In the third quarter, our free cash flow exceeded $1 billion, and we returned more than 75 percent of it through dividends and share repurchases.  Our confidence in the long-term sustainability of our business model drove the dividend increase of 24 percent that we announced in the quarter." 

Operating profit increased from a year ago as the benefit from the Japan pension program change and lower acquisition charges more than offset higher operating expenses that resulted primarily from the inclusion of a full quarter of Silicon Valley Analog.  Compared with the second quarter, operating profit was higher primarily due to the Japan pension program change, as well as higher gross profit and lower operating expenses.

3Q12 additional financial information

  •     Orders were $3.24 billion, up 6 percent from the year-ago quarter and down 5 percent from the prior quarter.
  •     Inventory was $1.85 billion at the end of the quarter, down $117 million from a year ago primarily due to the fair value write-up of inventory that was acquired from National Semiconductor.  Inventory was down $37 million from the prior quarter.
  •     Capital expenditures were $149 million in the quarter compared with $193 million a year ago and $146 million in the prior quarter.  Capital expenditures in the quarter were primarily for semiconductor manufacturing equipment.
  •     In August 2012, the company issued $1.5 billion of new long-term debt at an average coupon rate of 1.05%.  The company repaid $500 million of commercial paper borrowings in the quarter and has no remaining commercial paper obligations at the end of the quarter.
  •     The company used $600 million in the quarter to repurchase 20.6 million shares of its common stock and paid dividends of $194 million.


For the fourth quarter of 2012, TI expects:

  • Revenue:  $2.83 – 3.07 billion
  • Earnings per share:  $0.23 – 0.31

The fourth quarter's EPS will be negatively affected by about 6 cents from acquisition and restructuring charges.   

TI will update its fourth-quarter outlook on December 10, 2012.

For the full year of 2012, TI expects approximately the following:

  •     R&D expense:  $1.9 billion
  •     Capital expenditures:  $0.5 billion, down from the prior expectation of $0.7 billion
  •     Depreciation:  $1.0 billion
  •     Annual effective tax rate:  22%, down from the prior expectation of 26%

Odd that nobody seems to have problem with corporations, which now are people, seeing their tax rates progressively go lower. Then again, TXN isn't running for president. Yet.

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Mon, 10/22/2012 - 16:50 | 2910747 fuu
fuu's picture

No wonder no one can do any math.

Mon, 10/22/2012 - 17:01 | 2910794 slaughterer
slaughterer's picture

TXN is no longer competitive: why should the industry care about TXN?  There are far better chip designs from inter. fabless producers--TXN's growth through acquisition (and not innovation) story is one that will certainly lead to these types of results.   No surprise except that they are cutting capex, which for a company like this is surprising.  

Mon, 10/22/2012 - 17:12 | 2910829 Agent P
Agent P's picture

Could be that they're already running at low utilization rates on the fab capacity they picked up on the cheap over the past few years.  Could also be they're abandoning wireless to double down on the more predictable embedded business, which in the near term will only drag down utilization rates even more...or maybe you think they should continue to build capacity just for shits and grins?

Mon, 10/22/2012 - 17:46 | 2910881 TruthInSunshine
TruthInSunshine's picture

It's okay. Bernanke is prepared to expand asset purchases in such a way so as to include "unwanted, unneeded semiconductors."

Mon, 10/22/2012 - 18:11 | 2910966 Popo
Popo's picture

Let Bernanke try to keep the entire market afloat.    He's a maniacal zealot who believes deeply in his own godliness,  but he's not a complete retard.   He knows there are limits.  

(He does think the limits are greater than they are though.  Which is why I expect him to be surprised and disturbed when Mr. Market bends him over and pulls his shorts down).



Mon, 10/22/2012 - 19:09 | 2911096 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

TI: Training Institution. As we say, "If it was easy, even TI would do it."

Mon, 10/22/2012 - 19:02 | 2911080 emersonreturn
emersonreturn's picture

long toner

Mon, 10/22/2012 - 16:49 | 2910748 HaroldWang
HaroldWang's picture

And somehow trading higher AH. Unreal how that happens.

Mon, 10/22/2012 - 16:55 | 2910767 Conman
Conman's picture

They keep wondering why trading volume has collapsed. Who can trade this bizzaro market. It has totally detached from reality thanks to the Fed liquidity orgy.

Mon, 10/22/2012 - 18:11 | 2910967 yogibear
yogibear's picture

It's because William Dudley of the NY Fed keeps hitting the buy button with all the unlimited Federal Reserve magic money machine.

The Federal Reserve demonstrated it will buy everything. The Federal Reserve is trying to make itself the market.

Mon, 10/22/2012 - 18:42 | 2911043 spastic_colon
spastic_colon's picture

the cartoon financial network said they beat

Mon, 10/22/2012 - 16:52 | 2910758 kliguy38
kliguy38's picture

BULLISH! hehehe.....Maintain CONtrolfidence

Mon, 10/22/2012 - 16:57 | 2910773 ParkAveFlasher
ParkAveFlasher's picture

Speak-N-Spell, bitchez!

Mon, 10/22/2012 - 16:57 | 2910777 francis_sawyer
francis_sawyer's picture

I'm glad I saved my Commodore 64 & my Atari set...

Mon, 10/22/2012 - 17:00 | 2910785 devo
devo's picture

Guys, the establishment is going to fight to their death. That means green for after hour misses to fuck with bear's psychology. Slaying the bull is slow and painful, much like this:


Mon, 10/22/2012 - 17:05 | 2910798 slaughterer
slaughterer's picture

+1 devo, that is a funny clip.

Mon, 10/22/2012 - 17:07 | 2910811 devo
devo's picture

Tyler Durdin should use that guy's face for misses that go green.

Mon, 10/22/2012 - 17:05 | 2910799 Seasmoke
Seasmoke's picture

are they still in business ???

Mon, 10/22/2012 - 17:05 | 2910804 adr
adr's picture

I'm wondering what happens when you eat a Chipotle burrito, drink a Monster energy drink, and look up a hotel on Priceline on your iPad at the same time?

I think it means an instant explosive death. Hopefully news reports of spontaneous explosive deaths while mixing Chipotle, Monster, Priceline and Apple will finally cause the end of this full retard experiment they call a stock market.

Mon, 10/22/2012 - 18:13 | 2910976 The Alarmist
The Alarmist's picture

You blow up to William Shatner size and launch a third and far more entertaining period in a long and distinguished career.

Mon, 10/22/2012 - 17:09 | 2910814 overmedicatedun...
overmedicatedundersexed's picture

meet the corzine market. how much longer can I accept zirp for my savings while seeing aapl reach new highs..they will not pull me in , but i know it's getting hard to say out. when the ave investor goes in the phrase: and it's gone will ring across the land. we all know they are going to get your equity in the end don't we.

Mon, 10/22/2012 - 17:47 | 2910915 TruthInSunshine
TruthInSunshine's picture

Bernanke finally reeled me in. I'm going long Vereenigde Oost-Indische Compagnie, VOC.

Mon, 10/22/2012 - 17:41 | 2910890 Haager
Haager's picture

Time for a comeback for Ti99/4A

Mon, 10/22/2012 - 18:30 | 2911019 klockwerks
klockwerks's picture

Even better the TI-B11 calculator. Still have mine from 1988 and use it everyday

Mon, 10/22/2012 - 20:45 | 2911290 Reformed Sheep
Reformed Sheep's picture

Where was it made?

Mon, 10/22/2012 - 17:44 | 2910903 Fourth Horseman...
Fourth Horseman of the Apocalypse's picture

Since we are now in October, this means 4Q CAPEX is zero!!!

Mon, 10/22/2012 - 17:46 | 2910911 seek
seek's picture

TI's business is seen as unexciting, but many of the parts they make fall into the "jelly bean" category -- common, but needed in almost everything. The guidance on Q4 is significant as it supports that things are crashing hard. (Interestingly only Intel has indicated otherwise, so they may be a bit optimistic.)


Mon, 10/22/2012 - 18:07 | 2910959 yogibear
yogibear's picture

Bullish, rally on bots.

Mon, 10/22/2012 - 18:12 | 2910972 The Alarmist
The Alarmist's picture

Your constant celebration of these market misses is nothing short of unpatriotic, and during a time of war at that.  Report to the camp for re-education.

Mon, 10/22/2012 - 18:17 | 2910983 Prometheus418
Prometheus418's picture

I like TI, personally- but they're obviously got some strange ideas about how to run their business.  I've been researching ZigBee RFID tags for part tracking, and got on their mailing list.

How's this sound for a barrel of laughs- they sent out an invite to go to their technology expo in Detroit on... Devil's Night.  Nothing like the prospect of a little arson to spice up a business trip. (facepalm)  Wouldn't do it on that day anyhow, as I intend to take the kids trick or treating- but really, who the hell thought that was a great idea?

Mon, 10/22/2012 - 18:20 | 2910989 Racer
Racer's picture

earnings are soooo yesterday.... get with it...


Mon, 10/22/2012 - 21:04 | 2911342 orangegeek
orangegeek's picture

Who gives a shit what TI does.  It's all fucking bullish.  20,000 Dow and a 2000 SP500 here we come. 



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