Texas Instruments Inc. (NASDAQ: TXN) was among the major semiconductor players reporting earnings this week, and on Wednesday in particular. The semiconductor giant reported second quarter revenue down 2% to $3.23 billion, which generated net income of $696 million and $0.65 in earnings per share. Thomson Reuters had the consensus estimates of $0.65 in earnings per share and $3.26 billion in revenue.
TI also gave guidance for its third quarter of $0.62 to 0.72 per share (versus $0.75 per share expected) on revenues of $3.15 billion to $3.41 billion (versus $3.47 billion consensus). TI’s annual effective tax rate is expected to be about 30%.
TI noted that its revenue decline of 2% was tied to notably weak demand in communications equipment but was offset by a continued strong demand in automotive demand. TI’s Analog and Embedded Processing grew slightly, making up 85% of second quarter revenue. TI also noted that its Analog revenue was up for the eighth consecutive.
Gross margin was up 1 percentage point to 58.2%. Free cash flow rose 13% from a year ago to $3.6 billion, or 27% of revenue. TI’s balance sheet ended the quarter with $3.3 billion of cash and short-term investments at the end of the quarter — and some 82% of that cash was owned by the company’s U.S. entities.
The company said that its targeted cash return is 100% of free cash flow plus proceeds from exercises of equity compensation minus net debt retirement.
Texas Instruments shares closed down 1.85% at $49.30 on Wednesday, and the stock was up 1.5% around $50.00 in the after-hours indications. It has a 52-week range of $41.47 to $59.99, and the consensus analyst target was $56.32 coming into earnings.
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