This summary is based on the fourth quarter fiscal 2007 earnings call conducted by Texas Instruments Inc. (TXN) on January 22, 2008.
Management:
Vice President of Investor Relations: Ron Slaymaker
Senior Vice President and Chief Financial Officer: Kevin March
Key Investors Issues
- EPS were 54 cents per share compared to 45 cents per share last year.
- Net income was $756 million compared to $668 million for the year-ago period.
- Revenue was $3.56 billion compared to $3.46 billion for the year-ago period.
Fourth Quarter Highlights
Operating margin was 28%.
Revenue was just below expectations. Wireless, which was the primary reason for the small increase in mid-quarter revenue range, delivered as expected. Distributors did not replenish inventory late, as the company had been expecting them to.
Semiconductor revenue was about even with the third quarter and calculator revenue declined seasonally. Although the net effect was a 3% sequential decline, revenue grew 3% from the seasonally comparable year ago quarter. This was the first quarterly year-on-year growth for TI in a year.
Wireless became a contributor to growth.
Wireless revenue of $1.32 billion increased 9% from the year ago quarter and was up 5% sequentially. The biggest factor in this growth was 3G handsets, where revenue was up double-digit levels in both comparisons.
Wireless infrastructure was also up strongly, more than 20% sequentially and year-on-year. As the wireless market continues to change and as competition continues to build for digital baseband, the company is encouraged that handset OEMs are continuing to emphasize the importance of user interfaces and applications in their handset product lines.
These smartphones were the fastest growing segments of the handset industry last year, and most of them use applications processors from TI. The company has a strong position with OMAP and a great opportunity. As a result, OMAP will become increasingly important to TI''s wireless strategy in the years ahead.
Overall DSP product revenue grew to $1.36 billion, up 4% sequentially and 12% from a year ago.
Wireless handsets and communications infrastructure were the biggest drivers of the DSP trend.
Outside of wireless, DSP strategy is to focus on opportunities and applications where customers invest R&D in software that runs on architecture. Experience is that when customers invest in software, relationships with those customers are strategic and long lasting across multiple generations of their products as well as profitable.
Analog product revenue grew to $1.37 billion, a 2% sequential decline and 4% growth from a year ago.
- The sequential decline in analog revenue is mostly attributable to the sale of DSL CPE product line last quarter. This product line was a combination of analog and DSP products.
- High-performance analog was up 1% sequentially and grew 12% from year ago. High-performance analog growth was mostly driven by power management as well as precision and high-speed data converters and amplifiers.
- Outside of HPA, the most significant area of strength in analog was products sold into the hard disk drive markets.
From a top-down perspective, the opportunity in analog is encouraging.
At $37 billion, analog is one of the largest markets in the semiconductor industry.
