Bracing for Texas Instruments Earnings (TXN)

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After the close of trading, we should get earnings out of mobile chip giant Texas Instruments (NYSE: TXN).  First Call has estimates at $0.44 EPS on $3.40 billion in revenues.  As you will see, this is somewhat in-line with its last earnings guidance.

Back on September 9 it gave guidance of $0.42 to $0.47, within the$0.41 to $0.47 offered in July; and it gave revenue guidance of $3.33to $3.47 billion, also within the $3.26 to $3.54 billion rangeoffered.  The company has also recently upped its quarterly dividend to$0.11 per quarter or $0.44 per year.

As far as what lies ahead, First Call has the next quarter-end reportprojections at $0.43 EPS and $3.34 billion in revenues.  Estimates forthe quarter ahead have come down in just the last month and what may bemost important is if TI gives the same "massive drop off at the end ofSeptember" reasoning that others have offered.  Intel already said thatit is seeing a very cautious and difficult environment with limitedforecasting abilities and TI is also in the very bottom part of its52-week trading range as well, so the same should be a given andexpected or acceptable here.

Options traders appear to be braced for every bit of a $1.15 or moremove today, but keep in mind that options expiration is a month fromtomorrow and that leaves much time value on top of event risk.  Thisseems high considering today’s levels so don’t be shocked if pricetargets come down either way, but analysts are still having an averageprice target listed as about $27.00.

Unless the "guiding down expectations" turns into a "fire sale and thecompany pulling the plug on anything survivable" then Wall Streetshould be braced for some fairly solemn news today.

Jon C. Ogg
October 20, 2008