Citing tailwinds like tight expense controls and high demand for Texas Instruments' (TI) analog chips, the company reported $0.42 of earnings per share on sales of $2.88 billion. In each case, TI stormed past the highest end of its already optimistic guidance and closed the gap to 2008's pre-meltdown results by a fair bit. On the bottom line, TI came in just a penny short of the year-ago quarter's $0.43 of earnings per share.
We're looking at roughly equal profits dripping down from 15% lower sales. That dichotomy is a sure sign of operational efficiencies that TI didn't have last year. One more quarter like this one will bring TI's sales close to where they were before the Great Panic -- and if TI can keep its operational belt tight, that should translate into much higher profits. The operating margin saw a healthy increase of 22% last year to 26.5% this time around. Perhaps even more impressively, TI nearly doubled operating margin from last quarter.
And TI isn't even done improving its cost structure yet. The company bought cutting-edge chip manufacturing equipment for pennies on the dollar in memory maker Qimonda's bankruptcy sale and will use that low-cost investment to produce more and cheaper analog chips in 2010. TI is slowly leaving the low-margin wireless baseband sector to competitors like Analog Devices
In the high-growth mobile field, Qualcomm
But TI's OMAP processor is already in the ring, inside the fanciest new phone Verizon