In This Article:
(Bloomberg) -- Texas Instruments Inc. gave a disappointing earnings forecast for the current period, hurt by still-sluggish chip demand and higher manufacturing costs.
Most Read from Bloomberg
-
How Sanctuary Cities Are Preparing for Another Showdown With Trump
-
Texas HOA Charged With Discrimination for Banning Section 8 Renters
-
Billionaire Developer Caruso Slams LA Leadership Over Wildfires
-
Hoboken PATH Station Will Close for Almost a Month on Jan. 30
Profit will be 94 cents to $1.16 a share in the first quarter, the company said in a statement Thursday. The midpoint of that range, $1.05 a share, was well below the $1.17 that analysts projected on average. Sales will be $3.74 billion to $4.06 billion, compared with an estimate of $3.86 billion.
Much of the electronics industry remains mired in a slump — contributing to nine straight quarters of sales declines at the company. Manufacturing expenses also have affected profit, Texas Instruments executives said.
Texas Instruments gets the biggest portion of its sales from manufacturers of industrial equipment and vehicles, making its projections a bellwether for much of the global economy. Three months ago, executives said some of the company’s end markets were showing signs of emerging from an inventory glut, but the rebound hasn’t come as quickly as some investors anticipated.
The company’s shares slipped about 3% in extended trading following the announcement. They had gained about 7% this year through the close of regular trading.
Chief Executive Officer Haviv Ilan said Thursday that industrial demand remains slow. “Industrial automation and energy infrastructure still haven’t found the bottom,” he said on a conference call with analysts.
In the automotive segment, growth in China wasn’t as strong as it has been, meaning it can’t offset the expected weakness in other parts of the world.
“We haven’t seen the bottom yet — let me be clear,” Ilan said, though the company is seeing “points of strength.”
In contrast with the disappointing forecast, Texas Instruments’ fourth-quarter results handily beat analysts’ estimates. Though sales fell 1.7% to $4.01 billion, analysts had projected $3.86 billion. Profit was $1.30 a share, compared with a prediction of $1.21 per share.
The Dallas-based company is the biggest maker of chips that perform simple but vital functions in a broad range of electronic devices. It’s also the first large US chipmaker to report numbers in the current earnings season.
The company is running some plants at less-than-full capacity to reduce inventory stockpiles, Chief Financial Officer Rafael Lizardi said during the call. That’s taking a toll on profit.