By
Anders Bylund
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More Articles
January 23, 2008
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On Jan. 22, broad-line semiconductor designer Texas Instruments (NYSE: TXN ) released earnings for the 2007 fiscal year -- a period ended Dec. 31, 2007.
- Generous share buybacks turned flat earnings growth into a very nice ramp-up on a per-share basis. Management explains that the leaner, meaner asset-light manufacturing model that was implemented a couple of years ago simply doesn't call for a lot of infrastructure investments -- so the cash is pumped back to shareholders instead.
- TI customers clamored for high-margin digital signal processors and analog chips, which helped to drive gross margins wider.
- The company didn't tell us how much of these results came from international markets, but in 2006, U.S. sales accounted for only 13% of total revenue. Thus TI joins Intel (Nasdaq: INTC ) and IBM (NYSE: IBM ) in the recession-insulated international club.
- The P/E ratio may look lofty, but TI backs it up with rambunctious cash flow growth, which gives you a better valuation basis.
(Figures in millions, except per-share data)
Income Statement Highlights
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FY 2007
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FY 2006
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Change
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Sales
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$13,835
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$14,255
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(2.9%)
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Net Profit, Cont. Ops
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$2,657
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$2,638
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0.1%
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EPS, Cont. Ops
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$1.83
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$1.69
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8.3%
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Diluted Shares
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1,446
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1,560
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(7.3%)
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Get back to basics with the income statement.
Margin Checkup
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FY 2007
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FY 2006
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Change*
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Gross Margin
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53.0%
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50.9%
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2.1
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Operating Margin
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26.7%
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25.4%
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1.3
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Net Margin, Cont. Ops
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19.2%
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18.5%
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0.7
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*Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
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Assets
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FY 2007
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FY 2006
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Change
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Cash + ST Invest.
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$2,924
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$3,717
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(21.3%)
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Accounts Rec.
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$1,742
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$1,774
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(1.8%)
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Inventory
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$1,418
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$1,437
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(1.3%)
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Liabilities
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FY 2007
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FY 2006
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Change
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Accounts Payable
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$657
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$560
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17.3%
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Long-Term Debt
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$0
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$0
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N/A
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The balance sheet reflects the company's health.
Cash Flow Highlights
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FY 2007
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FY 2006
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Change
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Cash From Ops.
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$4,406
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$2,454
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79.5%
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Capital Expenditures
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$686
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$1,272
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(46.1%)
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Free Cash Flow
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$3,720
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$1,182
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214.7%
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Owner Earnings
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$3,041
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$4,180
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(27.2%)
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Free cash flow is a Fool's best friend.
Competitive Context
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Market Cap
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Trailing P/E Ratio
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CAPS Rating (out of 5)
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Qualcomm (Nasdaq: QCOM )
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$60,001
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18.8
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***
|
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Texas Instruments
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$41,210
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16.9
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****
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Analog Devices (NYSE: ADI )
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$8,230
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18.1
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***
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STMicroelectronics NV (NYSE: STM )
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$10,500
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N/A
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**
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National Semiconductor (NYSE: NSM )
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$4,580
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16.0
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**
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Using the latest reported numbers from Capital IQ. Keep your partners close and the competition in your vest pocket.
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