TI Prints Pink Slips With Mixed Earnings (TXN)

Texas Instruments Incorporated (NYSE: TXN) has posted its fourth quarter results of $0.08 EPS on revenue of $2.49 billion.  There are items here in the numbers and the company is very cautious ahead.  First Call estimates were $0.12 EPS and $2.37 billion in revenue.

Excluding restructuring charges of $0.13, earnings would have been $0.21. The companyfurther states that earnings were considerably better than its mid-quarterexpectations, so perhaps today is not a total writeoff.  A least as long as you are not deemed a non-critical or unproductive employee at the company.

TI is slashing 12% of its workforce via 1,800 layoffs and 1,600voluntary retirements and departures. The company estimates charges for the job cuts at $300 million and said that this combined with prior cuts will save about $700 million annually after completion. The cuts will mostly come from internal support functions andnon-core product lines.

But management goes on to say that the company is not counting on anear-term economic rebound for improvement and that these actions willposition the company to deliver solid financial results, even in aperiod of prolonged economic weakness.

For the first quarter the company forecast earnings of a loss of -$0.11 EPS to a profit of $0.03EPS and revenue of $1.62 billion to $2.12 billion.  Thecompany earnings target for thoe quarterincludes a $0.03 item per share from $50 million of estimatedrestructuring charges. It believes that earnings will continue to be hurt in the first quarter by costs associated with underutilizedmanufacturing assets.  First Call has estimates of $0.04 EPS on $2.10billion in revenue.

Its initial guidance for the full year is only on the expense sideof the equation and will offer more formal guidance on March 29.It sees R&D expenses at $1.5 billion, capital expenditures of $300million, depreciation of $900 million, and an annual effective tax rateof 24%.

TI closed down about 1.5% at $14.77 in regular trading today, and theinitial response has shares up about 4% at $14.77 in after-hourstrading.  The 52-week trading range is $13.38 to $33.00.

Jon C. Ogg
January 26, 2009