What to Expect From Texas Instruments' Earnings

Next Monday, Texas Instruments (NASDAQ: TXN  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.

As the maker of best calculators ever built, Texas Instruments holds a special place in the hearts of engineers, scientists, and financial analysts. But the company has gone well beyond simple calculating machines to build the semiconductor chips that have found their way into many of the most innovative and popular mobile devices in the tech market. Let's take an early look at what's been happening with Texas Instruments over the past quarter and what we're likely to see in its report.

Stats on Texas Instruments

Analyst EPS Estimate

$0.30

Change From Year-Ago EPS

(6.1%)

Revenue Estimate

$2.85 billion

Change From Year-Ago Revenue

(8.6%)

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will Texas Instruments' earnings add up this quarter?
In recent months, analysts have gotten more guarded about TI's earnings prospects, pulling back on their estimates for the just-completed quarter by $0.04 per share and cutting $0.18 off their full-year 2013 earnings-per-share consensus. The stock hasn't suffered from those revisions, though, rising about 6% since mid-January.

Those analyst calls fly in the face of the optimism that Texas Instruments has expressed about the most recent quarter. Last month, the company narrowed its earnings and revenue ranges, essentially chopping off the bottom half of the expected results while keeping upper targets unchanged.

But the big unknown for TI investors is whether the company's aggressive strategy of moving away from the smartphone and tablet mobile-chip business in favor of its analog semiconductor and embedded processor segments will succeed. The move certainly plays to TI's strengths and avoids the massive competition taking place in the mobile-device arena, but it also requires a willingness to forego the growth opportunities that the mobile niche offers. Given the poor sales figures that TI has produced recently, it's hard to feel confident about TI's direction at this point.

Still, TI has some promising ideas for growth. General Electric (NYSE: GE  ) is seeking to develop an industrial Internet that would connect users with a wide variety of sensor-enabled products, ranging from big industrial machinery like train locomotives and aircraft to basic household appliances and other consumer goods. GE aims to profit from the data that the network would provide, but both TI and rival Broadcom (NASDAQ: BRCM  ) have built chips to allow devices to communicate via Wi-Fi. Given that Broadcom continues to emphasize its position within the mobile-device market, it may choose to cede the lower-potential opportunity from an Internet of things to TI.

In TI's quarterly report, watch for how the company's internal transition is progressing. TI's bold strategy won't produce immediate results, but you should get an initial sense of whether the company is moving in the right direction from this quarter's numbers.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Click here to add Texas Instruments to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2371309, ~/Articles/ArticleHandler.aspx, 10/25/2014 8:16:36 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement