TI beats Wall Street revenue consensus, to close two plants

Texas Instruments Inc. on Monday reported lower fourth-quarter revenue and profit from a year earlier but predicted an end to the industry downturn.

The Dallas-based chipmaker also said it plans to close two older semiconductor factories in Houston and Hiji, Japan, which employ about 1,000 people combined.

TI posted revenue of $3.42 billion, down 3 percent from $3.53 billion in the fourth quarter of 2010. Still, revenue beat Wall Street estimates of $3.25 billion.

Net profit fell 68 percent to $298 million, or 25 cents per share, from profit of $942 million, or 78 cents per share, a year earlier. Wall Street consensus was 39 cents per share.

“Higher-than-expected revenue came in all of our major product lines” in the fourth quarter and mostly in December, TI vice president Ron Slaymaker said during a conference call Monday. He expects the slowdown, which began in the third quarter of 2011, to either hit bottom in the fourth quarter or bottom out during the current quarter.

The strength seen in late December has continued on chip orders so far this month, chief financial officer Kevin March said on the conference call.

TI’s analog business was the only unit to show revenue growth in the quarter, up 12 percent.

TI’s OMAP 4 app processor was a bright spot in wireless, with revenue doubling in the fourth quarter from a year earlier. OMAP is included in a number of high-profile smartphones (Samsung’s Nexus), tablets (Amazon Kindle Fire) and e-readers (Barnes & Noble’s Nook).

The factories

Fourth-quarter net profit was affected by charges of $256 million, or 16 cents per share, related to TI’s acquisition of National Semiconductor in September and $112 million, or 7 cents per share, related to the factory shutdowns.

“These are very old factories,” March said. “They’re of such an age and configuration that it’s not economically feasible to renovate them.”

The Houston wafer factory is 45 years old, and the Japanese wafer factory and assembly test site is 32 years old. Production from the two sites will be shifted to newer facilities in Dallas; Sherman; Portland, Maine; the Philippines; and China, March said.

The plant closings and employee layoffs will be spread over 18 months. TI will provide laid-off employees with severance packages based on years of service, and Houston employees will have an opportunity to apply for other jobs, March said.

TI expects to save about $100 million a year from the closings. TI said it will incur total charges for the closings of about $215 million, which will be spread over the next seven quarters.

For all of 2011, TI’s revenue was down 2 percent to $13.7 billion from nearly $14 billion. Net profit fell 31 percent to $2.23 billion, or 1.88 cents per share, from $3.2 billion, or 2.62 cents per share, in 2010.

Read on for 2012 outlook …