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Electronics Production | January 25, 2011

TI: Operating profit levels sequentially

Texas Instruments reported fourth-quarter revenue of USD 3.53 billion, net income of USD 942 million and earnings per share of 78 cents.

"Our strong financial results for the fourth quarter reinforce our view that the inventory-driven downturn that started in the second half of 2010 is now mostly complete," said Rich Templeton, TI chairman, president and chief executive officer. "We used this short and shallow downturn to replenish our inventory, return product lead times to normal and ramp three new factories. As markets start to grow again, we are well positioned with the products and manufacturing capacity that our customers need." Templeton noted that the fourth quarter capped an important year in TI's transformation. "Strong revenue growth of 34% last year was led by our core businesses of Analog, Embedded Processing and the part of our Wireless segment that is focused on smartphones and tablets. Each of these core businesses grew more than 40% and gained significant market share. Success in these businesses let us again return cash to shareholders by repurchasing 2.5 billion of TI stock and paying dividends of nearly USD 600 million. "As we enter 2011, Analog and Embedded Processing technologies are becoming even more pervasive in the electronics of everyday life. They are critical for the small form factors and long battery lives in tablets and smartphones, the safety and intelligence features in automobiles, and the reliability and energy-saving features of the smart grid. With our focused R&D and expanded manufacturing capacity, we're ready to deliver when and where our customers want." TI's operating profit included USD 144 million from the gain on the sale of a product line. Net income also included a USD 78 million tax benefit, which was primarily associated with the reinstatement of the federal R&D tax credit that was retroactive to the beginning of 2010. In addition, operating profit increased from a year ago due to higher gross profit from higher revenue. Compared with the prior quarter, operating profit was about even as lower gross profit, which resulted from lower revenue, offset the gain on sale and lower operating expenses. Analog: (includes high-volume analog & logic, high-performance analog and power management products) - Compared with a year ago, the increase in revenue was primarily due to high-performance analog products. High-volume analog & logic and power management products grew to a lesser extent. - Compared with the prior quarter, the decline in revenue was primarily due to power management products. The other two product areas declined to a lesser extent. - Operating profit increased from a year ago and declined from the prior quarter due to gross profit changes. Embedded Processing: (includes digital signal processor and microcontroller catalog products that are sold across a wide variety of markets, as well as application-specific products that are used in communications infrastructure and automotive electronics) - Compared with a year ago, revenue grew primarily due to catalog products. Revenue from products sold into communications infrastructure also grew strongly, while revenue from automotive applications increased to a lesser extent. - Compared with the prior quarter, revenue declined due to catalog products. Revenue from products sold into communications infrastructure and automotive applications was about even. - Operating profit increased from a year ago and declined from the prior quarter due to gross profit changes. Wireless: (includes connectivity products, OMAP applications processors and baseband products) - Compared with a year ago, revenue was about even as strength in connectivity products, and to a lesser extent applications processors, was offset by lower baseband revenue. - Compared with the prior quarter, revenue was even as growth in applications processors was offset by lower revenue from connectivity and baseband products. - Operating profit was about even with the year-ago and prior quarters. Other: (includes DLP products, custom ASIC products, calculators and royalties, as well as products sold under transitional supply agreements associated with recently acquired factories) - Compared with a year ago, revenue grew primarily as a result of transitional supply agreements associated with recently acquired factories and higher revenue from custom ASIC and DLP products. Royalties and calculator revenue increased to a lesser extent. - Compared with the prior quarter, revenue decreased due to the seasonal decline in calculator revenue. DLP product revenue declined and transitional supply revenue increased by similar amounts. Royalty revenue increased to a lesser extent and custom ASIC revenue was about even. - Operating profit increased both from a year ago and from the prior quarter primarily due to the gain on the sale of a product line. Higher gross profit also contributed to the year-ago increase. Lower gross profit partially offset the gain on sale compared with the prior quarter.
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