Please ensure Javascript is enabled for purposes of website accessibility

What to Expect From Texas Instruments' Earnings

By Dan Caplinger - Apr 18, 2013 at 5:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Will the chip maker's bold strategy make it stand out from the growing crowd?

Next Monday, Texas Instruments (TXN -0.95%) 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 (GE -1.79%) 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.

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

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Texas Instruments Incorporated Stock Quote
Texas Instruments Incorporated
TXN
$168.31 (-0.95%) $-1.62
General Electric Company Stock Quote
General Electric Company
GE
$74.11 (-1.79%) $-1.35

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
334%
 
S&P 500 Returns
117%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.