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CNBC ON DIGG

TI Shares Rise as Results Top Expectations

Published: Monday, 19 Oct 2009 | 4:59 PM ET

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By: CNBC.com

Texas Instruments beat earnings forecasts Monday and posted better-than-expected revenue, sending shares higher in afteroon trading.

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The chipmaker, which is recovering from an industry-wide decline in chip demand due to the global recession, said it earned 42 cents a share in its third quarter on sales of $2.88 billion, compared with 43 cents a share on sales of $3.39 billion in the same period last year.

Analysts who follow Texas Instruments expected the company to turn in a gain of 39 cents a share on sales of $2.82 billion, according to a consensus from Thomson Reuters.

TI shares [TXN Loading... () ] rose almost 3 percent in extended trading Monday. They closed at $23.50.

Texas Instruments

"Our performance in the quarter exceeded our expectations and was led by a second consecutive quarter of 20-percent growth in Analog," said Rich Templeton, chairman, president and CEO, in a press release. "We are encouraged with the strong sequential increase in demand for our products over the past two quarters as our customers are winding down their inventory corrections and have begun to increase production levels in their factories."

"This revenue growth, combined with our early actions to pare costs so that we would not be dependent upon an uncertain rebound in the overall economy, has resulted in solid improvements in our profitability," he added.

“The valuation is very reasonable here—14-16 times earnings…You’ve got a later cycle play so they’ve got several quarters yet to see improving numbers,” Scott Billeadeau, managing director at Fifth Third Asset Management told CNBC. “So I’d be very comfortable committing new capital here.”

TI raised its sales and earnings forecasts in hopes of improving semiconductor demand in early September.

Additonally, rival Intel [INTC Loading... () ] reported profit and revenue that both substantially outpaced expectations last week, suggesting stronger PC demand and signs of improvement in the corporate market.