TI reports Q1 chip orders up 18% sequentially; net loss narrowed

DALLAS -- Texas Instruments Inc. today reported a 2% sequential increase in revenues to $1.83 billion in the first quarter from Q4, with half of the growth due to semiconductor shipments and the rest to other products. TI said it now expects its revenues to increase 10% sequentially in the second quarter.

"We have turned the corner toward growth," said Tom Engibous, TI chairman, president and CEO of the Dallas-based company. "TI's shipments, affected by liquidation of excess inventory in 2001, are accelerating as they catch up to the rate of our customers' shipments.

"Beyond that, growth will be driven by improvements in our customers' end-equipment markets. The key driver for improvement will be a stronger economy, which will lead to more normal levels of global corporate spending," predicted the TI chief executive officer.

TI posted a net loss of $38 million in the first quarter compared to a net loss of $116 million in Q4 of 2001 and a net income of $230 million in Q1 last year. The company showed an operating profit of breakeven in Q1 vs. an operating loss of $195 million in the fourth quarter of 2002.

Semiconductor revenues totaled $1.52 billion in the first quarter, up 2% from a little less than $1.5 billion in the fourth quarter. TI said the gains were due to analog and digital signal processor (DSP) shipments. TI's semiconductor business posted a loss of $27 million vs. a profit of $304 million in Q1 of 2001.

TI said its analog revenues were up 8% sequentially from Q4 but down 32% from the same first-quarter period last year. DSP revenues increased 7% sequentially in the first quarter of 2002 from Q4, but those sales were 9% below the same period last year. TI said revenues for its remaining semiconductor products dropped 13% in Q1 from Q4 of 2001. Those chip sales were 49% lower than Q1 of 2001.

The company said semiconductor orders were up 18% sequentially to $1.54 billion in Q1 from the prior quarter, and up 2% from the same period last year. Bookings rose across a broad range of chip products, according to TI.

In a conference call with analysts after releasing the results, TI's chief financial officer said inventory corrections have been completed by most customers--especially the wireless handset makers, which were hit hard by the 2001 downturn. In the first quarter, TI's wireless chip revenues were up 12% sequentially while unit volume was down by a few percentage points, said Bill Aylesworth, senior vice president and CFO. He said the revenues were up because of a higher mix of more expensive 2.5-generation chip sets for Global Packet Radio Service (GPRS) networks.

"We are still shipping generally behind end consumption levels," he told analysts, referring to wireless chip sets. Inventory liquidation continues in the infrastructure equipment segment, Aylesworth said.

Average selling prices for analog ICs have been stable, he said. High-performance and custom analog products have remained relatively protected from pricing presses, but TI has also seen improvements in commodity products, Aylesworth said while fielding questions in the conference call.

"In the commodity analog area, we have generally seen price stability after several quarters of severe price declines. For our commodity analog and commodity logic, I would characterize pricing as stable, with a somewhat upward bias in the trend at this point," he said.

--J. Robert Lineback