Texas Instruments reported first-quarter results above analysts' expectations and raised guidance for the second quarter, sending its stock higher in after-hours trading.
The world's biggest maker of chips for mobile phones, posted lower quarterly profit and revenue, but it beat Wall Street estimates. The company also said it expected second quarter earnings and revenue to rise as orders improve because it had largely worked through an inventory correction that began last year.
"We believe the inventory correction that began in the second half of last year largely ended in the first quarter," said Chief Executive Rich Templeton, in a release. "Orders are beginning to rebound, and we expect sequential growth to resume in the second quarter."
The maker of chips for everything from calculators to televisions, said its profit was $516 million, or 35 cents a diluted share, from $585 million, or 36 cents a share in the year ago quarter. Revenue fell to $3.19 billion from $3.33 billion.
Last month, the company forecast first quarter earnings per share from continuing operations of 29 cents to 33 cents on revenue of $3.07 billion to $3.22 billion.
Analysts on average had expected earnings of 31 cents per share on revenue of $3.15 billion, according to Reuters Estimates.
Its shares have risen about 12% since January as investors bet a recovery was in sight after it posted disappointing results in the last two quarters due to falling inventories and growth skewed toward low-priced phones.
Texas Instruments expects second quarter earnings per share of 39 cents to 45 cents on revenue of $3.32 billion to $3.6 billion.
Analysts on average had expected second quarter revenue of $3.36 billion, according to Reuters Estimates.
Rising Phone Chip Demand
Improved demand for chips used in advanced phones and for high-performance analog chips boosted revenue and profits at Texas Instruments in the first quarter, Chief Financial Officer Kevin March said.
He said the company's projection for second-quarter revenue and earnings growth was based on an uptick in demand across its product range.
"We saw orders begin to increase across all our products," March said in an interview with Reuters.
He said the company's semiconductor book-to-bill ratio increase to 0.99 from 0.89 in the fourth quarter, an indicator of improving orders.