Chip maker Texas Instruments
Despite this, the company seems to be optimistic about the future, as it sees demand coming back across its portfolio of products. Texas Instruments gave better guidance for second-quarter earnings than what some analysts were expecting. That leads to the obvious question: What went wrong during this quarter for the company, and what makes it optimistic about the future? Time to find out.
A quick recap
The first-quarter numbers weren't anything to cheer about, as revenue declined to $3.12 billion, down by about 8% from the prior-year quarter. Charges related to the company's acquisition of National Semiconductor pulled down the company's bottom line, too, with a whopping 60% decline in net income to just $265 million.
Why did this happen?
A 43% decline in revenue for Texas Instruments' wireless-chip division in the first quarter has contributed to its poor show, but that has been prompted by the weak demand faced by some of its clients. For instance, Texas Instruments has been a supplier of chips to Nokia
In addition to the fall in demand for its traditional baseband wireless products, demand for the company's OMAP line of processors, which are mainly used in smartphones and tablets, has also weakened. Some analysts have said Texas Instruments may have been hurt by softening sales of Amazon's
A glimmer of hope
Having said all of that, there are definite signs of demand picking up. The company's first-quarter orders increased by 13% on a sequential basis. At the same time, the company is also addressing the problems with its wireless-products business by phasing out its baseband chip division altogether.
On the other hand, industry rival Qualcomm
The way ahead
Texas Instruments' order book is looking up, which could be a sign of good times ahead. The company also seems to be taking determined steps to correct a weak wireless-products division. I'd certainly be keeping an eye on Texas Instruments for now. You can do so by adding to your free watchlist.
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Keki Fatakia does not hold shares in any of the companies mentioned in this article. The Motley Fool owns shares of QUALCOMM and Amazon.com. Motley Fool newsletter services have recommended buying shares of Nokia and Amazon.com. The Motley Fool has a disclosure policy.
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