Texas Instruments Profits Down on Costs and Weaker Market Conditions
Published on: 23rd Jan 2013
Note -- this news article is more than a year old.
By: Ian Mansfield
Texas Instruments (TI) has reported that its fourth quarter revenues declined by 13 percent to USD2.98 billion while net profits also fell by 11 percent to USD264 million.
The company was hit by USD88 million worth of charges associated with its acquisition of National Semiconductor in 2011. Included in restructuring charges/other are charges of $351 million associated with restructuring the Wireless business, including $90 million of non-tax deductible goodwill impairment, and $12 million associated with the previously announced planned closure of several older factories.
Compared with a year ago, gross profit declined due to lower revenue and the costs associated with lower levels of factory utilization. These were partially offset by lower manufacturing costs and the non-recurrence of the $103 million in cost of revenue in the year-ago quarter attributable primarily to the fair value write-up of acquired inventory associated with the National acquisition.
"We continue to operate in a weak demand environment," said Rich Templeton, TI's chairman, president and CEO. "Our visibility into future demand remains limited as our lead times are short and our customers are reluctant to commit to extended backlog. On the positive side, we believe customers and distributors are operating with lean inventory. Our own operations are disciplined and performing well, with gross margin up despite increased underutilization costs, and with operating expenses down from a year ago."
Beginning with the first-quarter 2013 financial report, TI will transition its segment reporting to align with the company's strategic focus and new organizational structure. The Wireless segment will be eliminated, as the company has announced that it is winding down investment in Wireless products for the smartphone and consumer tablet markets.