TI bounces back as semis wake up

Electronic News, April 21, 1997

Including a pretax charge of $56 million related to severance actions and other costs from the mobile computing business sale to Acer Group (EN, Jan. 27), TI reported 1Q97 net income rose to $138 million, or 70 cents per share, from $132 million, or 68 cents per share, in 1Q96. Profit from operations rose to $227 million from $146 million.

Revenues from continuing operations were $2.3 billion, down 15 percent from the year-ago period, reflecting lower DRAM prices and the sale of businesses.

The company's orders for the quarter slipped to $2.5 billion from $2.6 billion in the year-ago period, but the decrease was due primarily to lower DRAM prices and sale of businesses.

Semiconductor revenues fell short of year-ago levels, mostly due to lower DRAM prices; memory, semiconductor revenues were "significantly higher", TI said. Profit from operations for semiconductors grew more than 50 percent from 4Q96. Revenues for digital signal processing solutions (DSPS) "continue strong" at more than 40 percent of semiconductor revenues.

Semiconductor orders from the year-ago period grew "at double-digit rates" over 4Q96; strength was seen across all products and geographic regions. Orders for DSPs and mixed-signal/analog products showed particular strength in mass storage, networking and wireless communications end equipment markets.

TI's backlog of unfilled orders as of March 31 was $1.9 billion, up $237 million from the end of 1996, due to strong semiconductor orders. Backlog was down $303 million from the year-ago period due to lower DRAM prices. Excluding memory, total backlog was up from 1Q96.

TI's defense operations, which are expected to be sold to Raytheon Corp. in 2Q97, are reported as a discontinued business. The deal is undergoing scrutiny by the Justice Dept. for antitrust implications.

Capital expenditures in 1Q97 fell to $225 million from $523 million in 1Q96, with 1997 cap spending to hit $1.1 billion.

TI said its plans for 1997 are based on "a moderate recovery" in the world semiconductor market of about 10 percent growth, following a decline of 9 percent in 1996. The non-DRAM portion of the market will likely grow more than 10 percent, with differentiated semiconductors growing two to three times faster than the overall market, TI said.