Texas Instruments Inc gave a quarterly sales and profit forecast that was in line with estimates, indicating that demand from electronics makers is poised to improve amid progress resolving the China-US trade dispute.
First-quarter earnings will be US$0.96 a share to US$1.14 a share, on revenue of US$3.12 billion to US$3.38 billion, the Dallas-based company said in a statement on Wednesday. On average, analysts predicted profit of US$1.04 a share and sales of US$3.2 billion, according to data compiled by Bloomberg.
Texas Instruments has the biggest customer list and widest product range in the semiconductor industry, making its earnings an indicator of demand across the economy.
The company has told investors the electronics business is in the middle of a typical cyclical decline after companies ordered too many parts last year. Such gluts typically last five quarters.
In Wednesday’s report, which also included fourth-quarter results, Texas Instruments posted its fifth consecutive period of year-over-year revenue declines.
“Most markets showed signs of stabilizing,” the company said in the statement.
The company’s forecast for the first quarter was held back by the outlook for the communications equipment industry, which is “going down hard,” Texas Instruments chief financial officer Rafael Lizardi said during a conference call.
Texas Instruments’ key industrial and automotive markets are close to returning to growth, he said.
Three months ago, Texas Instruments said that the US trade dispute with China, the world’s largest market for semiconductors, was adding to customer caution. Since then the countries have signed the first part of what is promised to be a comprehensive set of trade agreements.
Like other chipmakers, the company has raised to the US government the risks to the industry from the trade fight with China and the action taken against Chinese telecommunications equipment giant Huawei Technologies Co (華為). Washington has barred US companies from doing business in many cases with Huawei, citing national security concerns.
Texas Instruments generated 3 percent to 4 percent of its annual revenue last year and in 2018 from Huawei, one of the biggest buyers of semiconductors, the company said.
On Wednesday, Texas Instruments reported fourth-quarter net income fell to US$1.07 billion, or US$1.12 per share, from US$1.24 billion, or US$1.27, in the same period a year earlier. Revenue dropped almost 10 percent to US$3.35 billion. Analysts had estimated a profit of US$1.01 a share on sales of US$3.21 billion.
The company’s chips perform basic functions in everything from factory machinery to mobile phones.
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