The first earnings season of 2012 is in full swing, and tonight we get a fourth-quarter business update from semiconductor giant Texas Instruments
Analysts are setting the bar pretty low:
Q4 2011 Estimate
Q4 2011 Guidance (Midpoints)
|Revenue||$3.25 billion||$3.26 billion||$3.52 billion|
|Earnings Per Share||$0.39||$0.23||$0.78|
Sources: Yahoo! Finance and TI press releases.
In time-honored TI tradition, the company updated guidance in the middle of the quarter, resetting expectations well below the original forecast. Wall Street seems to have adjusted its revenue targets accordingly but not the earnings. TI could stick the landing against its own targets but still miss the earnings consensus by a country mile. Keep that gap in mind before jumping to conclusions about hits or misses tonight.
TI spokesman Ron Slaymaker says that the company is "undershipping demand." In other words, customers are busy burning off excess inventories built up in previous quarters. That situation can only last about as long as the surplus chip stockpiles do. I'm keeping an eye peeled for an update on channel health for sure.
Last week, Intel
Just as Intel puts a big weathervane over the sector, you don't have to be a TI investor to be interested in reading its tea leaves. Intel sinks and swims with servers and laptops; Texas Instruments has a hand in computers as well but also plays the same critical role for smartphones, tablets, and industrial tools.
Assuming that management knows the company's business better than outside analysts do, I expect a large earnings miss tonight. Wall Street firm Needham recently told investors to take some profits in this stock ahead of earnings, and I can't say I disagree with their analysis. But unless TI has destroyed your investing thesis, true Fools don't try to time the market like that -- it's a sucker's bet.
Add TI to your watchlist so you don't miss an update from -- or on -- the semiconductor titan. In the meantime, check out this short list of the three best smartphone plays from the chip industry. It's free today but might be gone tomorrow, so get your copy right away.
Fool contributor Anders Bylund holds no position in any of the companies mentioned. Motley Fool owns shares of Cirrus Logic, Intel, and Texas Instruments. Motley Fool newsletter services have recommended buying shares of Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.