Texas Instruments on Monday posted a small quarterly profit and better-than-expected revenue as demand for its chips appeared to stabilize even though it emphasized caution about the business climate.

The company also said that it expected to moderately increase production levels in its factories in the current quarter.

Shares rose to $18.05, or more than 4 percent, in late trade after closing at $17.32 in the regular session on the New York Stock Exchange.

TI posted a profit of $17 million or 1 cent a share, compared with a profit of $662 million or 49 cents per share in the year-ago quarter. Revenue fell 36 percent to $2.09 billion from $3.27 billion in the year-ago quarter.

The maker of chips for everything from cell phones to industrial equipment had forecast first quarter results ranging from a loss of 8 cents per share to break-even on revenue of $1.79 billion to $2.05 billion.

Analysts on average had expected a net loss of 4 cents per share on revenue of $1.9 billion, slightly below the midpoint of TI's guidance range, according to Reuters Estimates.

It forecast current quarter earnings per share of 1 cent to 15 cents on revenue of $1.95 billion to $2.40 billion.

TI trails Qualcomm Inc in the market for mobile phone chips, where it has been grappling with share losses as well as weak demand due to the recession.

(Reporting by Sinead Carew; Editing Bernard Orr)