Texas Instruments (NASDAQ:TXN) just reported second-quarter results. The semiconductor giant rarely surprises or disappoints investors very much in these reports, and this one's no different: Both earnings and sales were right in line with analyst estimates.
Sales fell 2% year over year to land at $3.23 billion. That's a rounding error below the Street consensus at $3.26 billion.
On the bottom line, GAAP earnings rose 5% to $0.65 per share -- exactly in line with analyst targets.
Among Texas Instruments' product lines, the automotive segment showed brisk order volumes while customers in communications equipment held on to their purses a bit tighter. The analog and embedded processing segment, which represented 85% of TI's sales this quarter, delivered modest gains as usual.
Looking ahead, TI's management set third-quarter guidance ranges well below the current Street view. Analysts are looking for third-quarter earnings of $0.75 per share on roughly $3.5 billion in total revenues. Both of these figures are above the top end of TI's new guidance ranges, which center on $0.67 per share and $3.3 billion, respectively.
TI's stated aim is to return 100% of its free cash flows to shareholders in the form of dividends and share buybacks. In the second quarter, the company produced $695 million of free cash flows and then spent $354 million on dividend payments and another $654 million on buybacks. All told, the cash return ratio was 145% of the available free cash.
The markets shrugged and held fairly steady on this news, as Texas Instruments stock rose a modest 0.4%. TI shares closed 1.9% lower on Wednesday as a reaction to head-to-head rival Linear Technology (NASDAQ:LLTC) released disappointing results on Tuesday night. Linear missed both sales and earnings targets and then followed up with low forward guidance as well. That stock closed 6.3% lower on Wednesday, sparking TI's pessimistic pre-earnings move.
The two companies agree that orders are slowing down in the coming quarter, but TI seems better equipped to handle a temporary downturn. Keep an eye on upcoming reports by Skyworks Solutions and NXP Semiconductors for a fuller view of the trends that held Texas Instruments and Linear Technology back this quarter.
Both reports are due within a week, both stocks took a steep dive on Linear's report, and Skyworks recovered nearly all of Wednesday's 4% slump thanks to TI's market update. What these companies say tomorrow and next Wednesday, respectively, should shine new light on the earlier reports as well.