10-QPeriod: Q3 FY2009

TEXAS INSTRUMENTS INC Quarterly Report for Q3 Ended Sep 30, 2009

Filed October 30, 2009For Securities:TXN

Summary

Texas Instruments (TXN) reported its third-quarter 2009 results, showing a sequential improvement in revenue and profitability, signaling a potential recovery from the economic downturn. Revenue for the quarter reached $2.88 billion, up 17% sequentially, driven by broad-based growth across all segments, particularly in the Analog segment which saw a 20% sequential increase. Net income was $538 million, or $0.42 per diluted share, a significant improvement from the prior quarter and demonstrating the benefits of cost-control measures implemented earlier. Despite a year-over-year decline in revenue and net income, the sequential growth and improved operating margins (26.5% in Q3 2009 vs. 22.0% in Q3 2008) suggest that TXN is navigating the challenging economic environment effectively. The company is strategically investing in its Analog and Embedded Processing segments, which are identified as future growth engines. TXN's strong balance sheet provides the financial flexibility to support these investments, as well as ongoing capital expenditures and shareholder returns through dividends and share repurchases. The company also announced a 9% increase in its quarterly dividend, reflecting confidence in its financial position and future prospects.

Financial Highlights

50 data points
Beta

Revenue

$2.88B

51.4% Gross Margin

Net Income

$538.00M

18.7% Net Margin

EPS (Diluted)

$0.42

Total Assets

$11.90B

Cash & Equivalents

$1.29B

Free Cash Flow

$608.00M

Financial Statements
Beta
Revenue$2.88B
Cost of Revenue$1.40B
Gross Profit$1.48B
R&D Expenses$368.00M
SG&A Expenses$340.00M
Operating Income$763.00M
Net Income$538.00M
EPS (Basic)$0.42
EPS (Diluted)$0.42
Shares Outstanding (Basic)1K
Shares Outstanding (Diluted)1K

Key Highlights

  • 1Sequential revenue growth of 17% to $2.88 billion in Q3 2009, indicating a rebound in demand.
  • 2Net income of $538 million ($0.42/share) in Q3 2009, a significant sequential increase reflecting improved operational leverage.
  • 3Analog segment revenue grew 20% sequentially, highlighting its role as a key growth driver.
  • 4Operating profit margin improved to 26.5% in Q3 2009, up from 14.0% in Q2 2009, demonstrating effective cost management.
  • 5Cash and cash equivalents plus short-term investments totaled $2.83 billion, indicating a strong liquidity position.
  • 6Announced a 9% increase in its quarterly cash dividend, signaling management's confidence in future performance.
  • 7Restructuring charges decreased significantly to $10 million in Q3 2009 from $85 million in Q2 2009, with ongoing cost reduction efforts.

Frequently Asked Questions

The main driver for the sequential revenue increase of 17% to $2.88 billion in Q3 2009 was broad-based growth across all business segments, with a particularly strong performance in the Analog segment, which saw a 20% sequential revenue increase. This suggests a general improvement in market demand as customers work down inventory levels.

Texas Instruments managed its expenses effectively by continuing cost-control efforts and benefiting from reduced restructuring charges ($10 million in Q3 2009 vs. $85 million in Q2 2009). The sequential revenue growth, combined with these cost efficiencies, led to a significant improvement in operating profit margin, which rose to 26.5% in Q3 2009 from 14.0% in Q2 2009.

Texas Instruments identifies its Analog and Embedded Processing segments as its primary growth engines for the future. The company is strategically investing in these areas, including expanding manufacturing capacity for analog chips using advanced 300-millimeter wafer technology. Their strong balance sheet supports these investments, ongoing capital expenditures, and shareholder returns.

Yes, Texas Instruments continued to repurchase shares, spending $602 million in the first nine months of 2009. In the third quarter specifically, they purchased approximately 10.5 million shares under their publicly announced program. Additionally, the company declared a quarterly dividend of $0.11 per share for Q3 2009 and subsequently announced an increase to $0.12 per share for the next dividend, reflecting confidence in their financial health.