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Wed, Jul 26, 2006 - Page 10 News List

Mobile chip sales aid TI's operating earnings growth


Semiconductor maker Texas Instruments Inc (TI) said its second-quarter operating profit rose on solid and broad-based sales of components for mobile phones and electronic devices.

Including one-time items and proceeds from businesses it has sold, TI had net income of US$2.39 billion, or US$1.50 per share in the April-June period, up from US$628 million, or US$0.38 per share a year earlier, it said on Monday.

However, about US$1.65 billion came from selling a sensors business to private-equity groups.

On an operating basis, TI -- the biggest maker of chips for mobile phones -- said it earned US$739 million, or US$0.47 per share, after excluding parts of the business it has sold. That matched the forecast of analysts surveyed by Thomson Financial.

The operating earnings of US$0.47 per share in the second quarter included a cost of US$0.03 per share to expense stock options or a gain of US$0.05 per share for a sales-tax refund and a royalty settlement.

Last month the company predicted it would earn US$0.46 to US$0.48 per share, thanks partly to a tax break and a lawsuit settlement.

Revenue rose 24 percent to US$3.7 billion from US$2.97 billion a year ago. Analysts had forecast US$3.68 billion in the just-finished quarter.

The Dallas-based company said it expects to earn US$0.42 to US$0.48 per share in the third quarter -- in line with Wall Street forecasts -- on revenue of US$3.63 billion to US$3.95 billion. Analysts were expecting third-quarter sales of US$3.83 billion.

The strong second-quarter results were foreshadowed last week, when two major cellphone makers reported big jumps in second-quarter profits.

Nokia Corp, TI's largest single customer, said earnings rose 43 percent and repeated its prediction that handset sales would gain 15 percent this year. Motorola Inc and Sony Ericsson, two other TI customers, also reported large increases in sales.

Texas Instruments is largely protected from the slower growth in chips for personal computers, which account for less than 10 percent of its semiconductor sales.

Executives said TI's backlog of orders was rising and they expected seasonal growth as their customers gear up production of electronics devices for the holiday shopping season.

Inventory levels -- either gluts or shortages -- have bedeviled TI in the past. But company vice president Ron Slaymaker said inventories appeared to be balanced.

Slaymaker said the main threats for the rest of the year included events in the Middle East and the possibility of higher interest rates.

"If that created a change in consumer behavior and buying patterns, certainly that could drive us toward the low end" of its forecast for the rest of the year.

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