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TI posts Q1 net profit $367 m

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CIOL Bureau
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Ben Berkowitz



LOS ANGELES: Texas Instruments Inc. said its quarterly profit rose three-fold, as strong sales of chips for products like televisions offset an expected decline in revenue for wireless devices.



The results from the world's largest maker of chips for cell phones calmed investor fears about a sales shortfall last week at top customer Nokia, and TI's stock rose about 2 percent in after-hours trade.



The company reported a first-quarter net profit of $367 million, or 21 cents a share, in line with analyst estimates, compared with $117 million, or 7 cents, a year earlier.



"They showed that they are more than just a wireless handset company," said David Wu, an analyst at Wedbush Morgan Securities. "The semiconductor industry recovery is very broad-based."



In line with that recovery, TI also said it would add production capacity, boost planned capital spending and increase research and development in response to continued strong chip demand it forecast for the remainder of the year.



"Our portfolio is very broad-based, and we're seeing this demand across the portfolio," Kevin March, chief financial officer of TI, said in a phone interview. He said orders outpaced revenue in the semiconductor unit by 9 percent in the first quarter, a sign of ongoing demand.



TI is a widely watched gauge of the technology industry's health because of its size and the broad range of devices -- from mobile phones to TVs to cameras to calculators -- that rely on its products.



NO NOKIA WORRIES



Last week's sales shortfall at phone maker Nokia had sparked some investor concern that TI's first-quarter results and second-quarter outlook would be affected.



"I thought (TI's results and outlook) were pretty good, considering how skittish people were about Nokia last week," said Loop Capital Markets analyst Ren Zamora.



TI's March said too much was made of the Nokia shortfall and its potential impact on the company.



"I think what people should begin to appreciate there is that our wireless business is more than just Nokia, and we've got a very broad base of both products and customers in there," he said.



The company's first-quarter sales rose to $2.94 billion from $2.19 billion, and its closely watched gross profit margin was 45 percent, up 1.9 percentage points from the prior quarter.



Analysts surveyed by Reuters Research, a unit of Reuters Group Plc, had expected first-quarter earnings per share on average of 21 cents on revenue of $2.89 billion.



For the current quarter, the company forecast revenue of $3.09 billion to $3.33 billion and earnings per share of 23 cents to 26 cents.



Analysts had been expecting second-quarter earnings per share of 20 cents to 27 cents, with an average estimate of 23 cents, on revenue of $3.06 billion, according to Reuters Research.



The company also boosted its capital spending plan for the year to $1.3 billion from $1.1 billion.










© Reuters

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