Texas Instruments’ stock slides after 3Q revenue miss and weak guidance

Texas Instruments’ stock slides after 3Q revenue miss and weak guidance

Texas Instruments’ stock has taken a hit after reporting lower-than-expected revenue for the third quarter and providing weak guidance. The chip maker reported net income of $1.709 billion, or $1.85 a share, compared to $2.295 billion, or $2.47 a share, in the same period last year. Third-quarter revenue came in at $4.532 billion, down from $5.241 billion a year ago. The company cited industrial weakness and a decrease in automotive growth as factors contributing to the disappointing results. Looking ahead, Texas Instruments expects revenue between $3.93 billion and $4.27 billion for the fourth quarter, with adjusted earnings between $1.35 and $1.57 a share. The stock fell 4.4% in extended trades following the announcement.

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Texas Instruments’ stock slides after 3Q revenue miss and weak guidance

Texas Instruments Inc. (TXN) reported its third-quarter results on October 24, 2023, and the stock saw a decline in extended trades due to a revenue miss and weaker-than-expected guidance. The chip maker’s net income and earnings per share also experienced a decline compared to the same period last year. The company’s CEO, Haviv Ilan, addressed the results and highlighted the weakness in the industrial market, while noting growth in the automotive market. The fourth-quarter outlook provided by Texas Instruments indicates a range for revenue and earnings, and analysts’ expectations for the next quarter were discussed as well. The article also covers the breakdown of revenue for the third quarter and the increase in inventory. Lastly, the article mentions the decline in Texas Instruments’ stock performance following the release of the earnings report.

The Chip Maker’s Third-Quarter Results

Texas Instruments reported its third-quarter results on October 24, 2023. The company’s performance in this quarter was disappointing, with revenue falling below analysts’ expectations and weaker-than-expected guidance for the future.

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Disappointing Revenue and Guidance

The third-quarter revenue reported by Texas Instruments missed the mark, coming in at $4.532 billion, down from $5.241 billion in the same period last year. Analysts surveyed by FactSet were expecting sales of $4.579 billion. The weaker-than-expected revenue performance contributed to the decline in the company’s stock.

Net Income and Earnings Per Share

The net income for Texas Instruments in the third quarter was $1.709 billion, compared to $2.295 billion in the same period last year. Earnings per share also experienced a decline, with the company reporting $1.85 per share, down from $2.47 per share in the previous year’s quarter. This decline in net income and earnings per share was attributed to several factors, including a benefit of 5 cents for items that were not included in the company’s original guidance.

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Analyst Expectations

Analysts had certain expectations for Texas Instruments’ earnings per share in the third quarter. The survey conducted by FactSet showed that analysts were looking for earnings of $1.82 per share. The actual earnings per share reported by the company were slightly higher, but still fell short of expectations.

Revenue Breakdown

The breakdown of Texas Instruments’ revenue for the third quarter provides insights into the performance of different sectors within the company. Analog revenue, which refers to revenue generated from analog chips, was $3.353 billion, down from $3.993 billion in the previous year’s quarter. Embedded processing revenue, which includes revenue from microcontrollers and digital signal processors, was $890 million, up from $821 million in the same period last year. Analysts were expecting analog revenue of $3.296 billion and embedded processing revenue of $887 million, showing a slight variance from the actual figures reported.

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Texas Instruments’ CEO Statement

In response to the third-quarter results, CEO Haviv Ilan issued a statement addressing the performance of the company. Ilan acknowledged the flat sequential revenue and the 14% decrease from the same quarter a year ago. He also highlighted the growth in the automotive market and the weakness in the industrial market, which he noted had broadened during the quarter. Ilan’s statement provides valuable insights into the specific factors influencing Texas Instruments’ performance.

Industrial Weakness and Automotive Growth

The weakness in the industrial market had a significant impact on Texas Instruments’ performance in the third quarter. The industrial market experienced a mid-single digit decline sequentially, with weakness becoming more apparent across nearly all sectors. On the other hand, the automotive market continued to grow, showing a mid-single digit increase. Other sectors, such as personal electronics and communications equipment, also experienced varying levels of performance.

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Fourth Quarter Outlook

Texas Instruments provided guidance for the fourth quarter, indicating a range for revenue and earnings. The company expects revenue between $3.93 billion and $4.27 billion, with earnings projected to be between $1.35 and $1.57 per share. Analysts surveyed by FactSet have slightly different expectations, with revenue forecasted at $4.502 billion and adjusted earnings at $1.79 per share. The fourth-quarter outlook sets the stage for the company’s performance in the near future.

Inventory Increase

The third-quarter report also highlighted an increase in Texas Instruments’ inventory. The company’s inventory for the quarter was $3.908 billion, up from $2.404 billion in the same period last year. Additionally, there was a sequential increase of $179 million in inventory. The increase in inventory may have implications for the company’s production and supply chain management.

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Stock Performance

Following the release of the third-quarter results, Texas Instruments’ stock experienced a decline in extended trades. The stock fell 4.4%, reflecting investor reaction to the revenue miss and weaker-than-expected guidance. The decline in stock performance suggests that investors are concerned about the company’s future prospects and potential challenges in the semiconductor market.

In conclusion, Texas Instruments’ third-quarter results were disappointing, with a revenue miss and weaker-than-expected guidance. The net income and earnings per share also experienced a decline compared to the same period last year. The performance in the industrial and automotive markets played a significant role in the company’s results. Analyst expectations for the next quarter were discussed, along with the breakdown of third-quarter revenue and the increase in inventory. The decline in Texas Instruments’ stock performance further reflects investor sentiment towards the company’s outlook.

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