Texas Instruments profit, outlook beat forecasts

Chipmaker Texas Instruments Inc. posted a smaller-than-expected fall in quarterly profit and said a broad recovery would help it beat expectations in the second quarter, sending its shares up 9 percent on Monday.

The world's biggest maker of chips for mobile phones said it saw a pick-up in demand from third-generation advanced phones toward the end of the first quarter and that demand for high-performance analog chips was at the high end of its expectations.

TI's outlook was based on improvement in orders across all products, Chief Financial Officer Kevin March told Reuters.

The company said it expected second-quarter earnings and revenue to rise as orders improve, because it has largely worked through an inventory correction that began last year.

Doug Freedman, an analyst at American Technology Research, said the strong guidance indicated that business had picked up materially toward the end of the first quarter.

"Clearly things turned around for the company. The commentary that they saw the end of the inventory correction is an impressive one," said Freedman.

TI, which makes chips for everything from calculators to televisions, said its first-quarter profit fell to $516 million, or 35 cents per diluted share, from $585 million, or 36 cents, in the year-ago quarter.

The result beat TI's own forecast for 29 to 33 cents per share and topped the average forecast from analysts of 31 cents, according to Reuters Estimates.

First-quarter revenue fell to $3.19 billion from $3.33 billion a year ago but was slightly above the $3.15 billion expected by Wall Street, according to Reuters Estimates.

The company forecast second-quarter earnings per share of 39 to 45 cents on revenue of $3.32 billion to $3.6 billion. That compared with forecasts of 37 cents on revenue of $3.36 billion, according to Reuters Estimates.

"We have our inventory now staged very well to handle a resumption of growth in the second quarter," March said.

TI's shares have risen about 12 percent since January as investors have bet on a recovery after the company posted disappointing results in the previous two quarters due to falling inventories and the skewing of growth toward low-priced phones.

The stock rose to $35.34 in late trading after closing at $32.41 on the New York Stock Exchange.