Summary
Texas Instruments (TXN) reported its second-quarter 2008 results, showing a slight year-over-year revenue decline of 2% to $3.35 billion, primarily driven by a slowdown in its larger Semiconductor segment. While Analog and Embedded Processing product lines showed growth, Wireless revenue saw a notable decline. The company experienced unexpected demand softness in June, attributed to distributors reducing inventory and a weaker economic environment. Despite the revenue dip, operating profit increased year-over-year due to reduced R&D expenses, and diluted Earnings Per Share (EPS) rose to $0.44, up from $0.42 in the prior year, aided by a lower share count from ongoing stock repurchase programs. Financially, TXN maintained a strong liquidity position with $1.65 billion in total cash and short-term investments at the end of the quarter. However, inventory levels increased, and the company plans to manage this down over the remainder of the year. The company also highlighted potential challenges related to its investment in auction-rate securities, which experienced failed auctions due to market liquidity issues, although management expressed confidence in recovering principal and not impacting operational funding. Overall, the report indicates a resilient performance in a challenging economic climate, with strategic focus on core growth areas.
Financial Highlights
29 data points| Revenue | $3.35B |
| Cost of Revenue | $1.60B |
| Gross Profit | $1.75B |
| R&D Expenses | $488.00M |
| SG&A Expenses | $428.00M |
| Operating Income | $833.00M |
| Net Income | $588.00M |
| EPS (Basic) | $0.44 |
| EPS (Diluted) | $0.44 |
| Shares Outstanding (Basic) | 1.32B |
| Shares Outstanding (Diluted) | 1.34B |
Key Highlights
- 1Revenue for Q2 2008 was $3.35 billion, a 2% decrease year-over-year, with semiconductor revenue down 3%.
- 2Diluted EPS was $0.44, an increase from $0.42 in Q2 2007, driven by share repurchases and lower R&D expenses, despite lower net income.
- 3Analog and Embedded Processing product lines showed robust growth (10% year-over-year), indicating strength in key strategic areas.
- 4Wireless revenue declined 12% year-over-year, impacted by a shift to lower-priced baseband products and normal price declines.
- 5The company experienced an unexpected slowdown in demand in June, attributed to distributors reducing inventory and a weaker economic environment.
- 6Inventory levels increased by $233 million sequentially, reaching 93 days, which the company plans to reduce.
- 7The company holds $568 million in auction-rate securities that experienced failed auctions, though principal recovery is expected and operational funding is not believed to be impacted.