TI ups Q4 guidance, analysts note strong end demand
Noting improvement led by its core analog and embedded franchises, analysts are encouraged by Texas Instruments as it calls for a better midpoint in revenue and higher earnings per share.
By Suzanne Deffree, Managing editor, news -- EDN, December 9, 2009
Gaining a thumbs-up from industry watchers and market analysts, Texas Instruments late Tuesday raised its Q4 guidance, calling for a better midpoint in revenue and higher EPS (earnings per share).
TI said on a conference call Tuesday afternoon that it now expects revenue in the range of $2.90 billion to $3.02 billion and EPS in the range of $0.47 to $0.51. The company had previously guided for Q4 revenue range of $2.78 billion to $3.02 billion and EPS in the range of $0.42 to $0.50.
The move is proving to sit well with analysts.
“We remain encouraged by [TI’s] execution on costs and margins with the improvement led by its core analog and embedded franchises,” Tim Luke, a semiconductor market analyst at Barclays capital, said in a report this morning.
“Revenue upside is being driven by strong end demand across nearly all end markets and geographies, including improvements in Europe and in industrial and automotive shipments,” Craig Berger and Robert Pikover, semiconductor market analysts at FBR Capital Markets, said in a separate report this morning.
FBR noted a leveling of the electronics supply chain in its TI report. “Importantly, management said distribution inventory dollars are largely holding steady in Q4 (no inventory build),” the analysts said. “Lead times do continue to expand further in Q4 as product shortages are widespread across the industry, a function of chip production increases being unable to keep up with device production increases as the global inventory reduction concluded in Q3.”
According to FBR, these dynamics suggest future chip replenishment is likely at distribution and OEMs in 1H10 (the first half of 2010). “We believe additional assembly/test and lead frame capacity will emerge in 1H10, and that lead times will return to more normalized levels without the industry building any excess inventory stockpiles,” the analysts said.
While still positive, Barclays and FBR noted that Q4 inventory levels will need to be watched for double ordering, which would be a mathematical function of longer lead inventory times. If excess stockpiles are not built, then double orders are not problematic.
TI’s move echoes similar action taken by the company in September when the company then raised its Q3 guidance.
TI’s Q4 ends on December 31.
