TI Sets Earnings Benchmark For Broadcom (TXN, BRCM)

Texas Instruments Inc. (NYSE: TXN) came in with its earnings of $0.01 EPS and $2.09 billion in revenue.  Thomson Reuters had estimates at -$0.03 EPS on $1.9 billion in sales.  Outside of restructuring items, the company’s operating profit was $0.07 EPS.  It was barely a month ago that we saw guidance from T.I., and its mid-quarter update was $-$0.08 to $0.00 EPS and $1.79 to $2.05 billion in revenue.  Its shares were only at $14.69 back then.  More importantly than this being a single event, the report may set the tune for how traders will treat rival Broadcom Corp. (NASDAQ: BRCM) when it reports earnings tomorrow.

To show how soft this is, the drop is 36% year-over-year and is down 16% sequentially.  The company said that while earnings were ahead of plan, it is emphasizing caution about the business climate.  It said demand has begun to stabilize and many customers have upped orders, but it has yet top see any broad-based recovery and will keep its operations flexible.

As far as the coming outlook, it sees $0.01 to $0.15 EPS (vs. $0.02 estimates) and sees revenues at $1.95 billion  to $2.4 billion  (vs. $1.99 billion estimates). Its estimates includes $100 million in restructuring charges or $0.05 against EPS.

So far it looks like Wall Street traders are more than comfortable with the T-I skepticism.  This just isn’t as bad as what traders were willing to expect.

Shares closed down 3.6% at $17.32 in regular trading today, and its 52-week trading range is $13.38 to $33.00.  Shares are trading back up at $17.90 in the initial after-hours session.

Rival chip-maker Broadcom (BRCM) closed down almost 5% at $21.79 in regular trading today, and its shares are at $21.87 in the after-hours reaction.  Broadcom’s 52-week trading range is $12.98 to $29.91.

Jon C. Ogg
April 20, 2009