Texas Instruments Inc. on Thursday raised its outlook for second-quarter earnings and revenue above market expectations on strong demand across its chip business, boosting its shares 3 percent.
TI, which sells chips for everything from cell phones to calculators, now expects second-quarter earnings from continuing operations of 46 cents to 48 cents a share, versus its earlier estimate of 38 cents to 43 cents a share.
Analysts on average had forecast 40 cents a share.
TI said a legal settlement and a tax gain added 5 cents to 6 cents to earnings per share, but also cited strong demand for flat screen television technology, chips for wireless network gear, and analog chips for printers and storage applications.
The strength that we're seeing relative to our initial expectations is coming from a number of areas, Ron Slaymaker, TI's head of investor relations said in a call with analysts. He said no one segment had a blow out quarter.
Its actually a number of areas. I wouldn't say any of them are way ahead of expectations, he added noting that demand and inventory levels were in line with typical seasonal trends.
TI forecast revenue of $3.63 billion to $3.78 billion, up from its earlier view of $3.46 billion to $3.75 billion. It said its latest forecast included a $70 million cash payment for a patent litigation settlement.
Analysts on average had expected $3.62 billion in sales, according to Reuters Estimates.
It's a nice positive surprise. You want TI to be getting the upside from its core semiconductors, said Stifel Nicolaus analyst Cody Acree.
TI, which is the leading supplier of chips for cell phones, raised its target for semiconductor revenue to a range of $3.45 billion to $3.59 billion, from its earlier target of $3.29 billion to $3.56 billion.
Asked by several analysts about whether the company was concerned about weakening semiconductor demand for the rest of the year, Slaymaker said TI was comfortable with order trends.
We're not seeing signs of demand slackening at all at this point, he said without giving specific full-year or third-quarter guidance.
The Philadelphia Stock Exchange's semiconductor index has fallen 6 percent this week, as worries about a possible price war between Intel Corp. and Advanced Micro Devices Inc. added to overall market weakness amid rising global interest rates.
TI said it expects sales of $175 million to $185 million compared for its educational business, which includes calculators, compared with its previous range of $170 million to $190 million.
The company's shares rose to $31.69 in late trade on Inet, after closing at $30.72 on the New York Stock Exchange.