10-QPeriod: Q1 FY2010

TEXAS INSTRUMENTS INC Quarterly Report for Q1 Ended Mar 31, 2010

Filed April 30, 2010For Securities:TXN

Summary

Texas Instruments Inc. (TXN) reported a significant rebound in its first quarter ended March 31, 2010, compared to the same period in 2009. Revenue surged by 54% year-over-year to $3.21 billion, driven by increased shipments across most product segments, particularly Analog and Embedded Processing. This strong revenue growth, coupled with improved manufacturing utilization, led to a dramatic increase in profitability. Net income soared to $658 million from $17 million in the prior year, and diluted earnings per share rose to $0.52 from $0.01. The company highlighted robust demand and expanded manufacturing capacity, with production output at an all-time high. Investments made during the 2009 downturn are now contributing to market share gains. While most segments showed strength, the Wireless segment saw a decrease in revenue compared to the prior quarter, attributed to seasonally lower shipments of baseband products. Overall, the results indicate a strong recovery and positive momentum heading into the second quarter.

Financial Highlights

48 data points
Beta

Revenue

$3.21B

52.7% Gross Margin

Net Income

$658.00M

20.5% Net Margin

EPS (Diluted)

$0.52

Total Assets

$12.37B

Cash & Equivalents

$1.22B

Free Cash Flow

$491.00M

Financial Statements
Beta
Revenue$3.21B
Cost of Revenue$1.52B
Gross Profit$1.69B
R&D Expenses$370.00M
SG&A Expenses$359.00M
Operating Income$950.00M
Net Income$658.00M
EPS (Basic)$0.53
EPS (Diluted)$0.52
Shares Outstanding (Basic)1K
Shares Outstanding (Diluted)1K

Key Highlights

  • 1Revenue increased significantly by 54% year-over-year to $3.21 billion, indicating a strong recovery from the previous year.
  • 2Net income saw a substantial jump to $658 million, a dramatic increase from $17 million in Q1 2009, signaling improved profitability.
  • 3Diluted Earnings Per Share (EPS) grew to $0.52 from $0.01 in the prior year, reflecting enhanced shareholder value.
  • 4Gross profit margin improved substantially to 52.7% from 38.6% in Q1 2009, driven by higher revenue and better manufacturing asset utilization.
  • 5Operating profit reached $950 million (29.7% of revenue), a significant improvement from $10 million (0.5% of revenue) in the prior year.
  • 6The company is investing in manufacturing capacity, with production output at an all-time high and plans for further increases throughout 2010.
  • 7Cash flow from operations was strong at $710 million, up from $251 million in the prior year, supporting liquidity and investments.

Frequently Asked Questions

The primary driver of Texas Instruments' revenue growth in Q1 2010 was a significant increase in shipments across a broad range of products, particularly in the Analog and Embedded Processing segments. This was supported by general strength in most end markets, excluding a seasonal dip in Wireless baseband products.

Profitability saw a dramatic improvement. Net income rose to $658 million from just $17 million in Q1 2009. This was due to a combination of significantly higher revenue, improved gross margins driven by increased revenue and better manufacturing utilization, and effectively managed operating expenses, despite some increases in compensation-related costs.

Texas Instruments expressed optimism for the second quarter, with demand for its products remaining strong. The company is actively increasing manufacturing capacity, with production output at an all-time high. They are adding 200-millimeter equipment and ramping up their new 300-millimeter Analog facility, with shipments expected to begin in the fourth quarter of 2010.

The Analog and Embedded Processing segments demonstrated strong growth, setting new record revenue levels. The 'Other' segment also showed significant year-over-year revenue and operating profit increases, driven by DLP products and royalties. The Wireless segment's revenue grew year-over-year but saw a slight decline from the prior quarter due to seasonal factors in baseband product shipments.