Texas Instruments Falls After Beating Estimates
By Cindy Christ

A strong earnings report from Texas Instruments failed to buoy the chipmaker's stock price for most of the session Tuesday until a late day rally powered big cap tech names higher across the board.

Shares in Texas Instruments dropped as much as 9 percent intraday despite posting earnings Monday that beat Wall Street estimates by 2 cents in a quarter that's historically slow.

Market watchers said investors were disappointed the firm didn't match more optimistic "whisper numbers" of around 57 cents, causing shares to sell-off in after hours trading from Monday's close of $156.94.

TI shares are off nearly 40 percent from their 52-week high of $199.56 reached in March.

By the end of the session, shares in Texas Instruments (TXN) rebounded to close up $1, or 0.67 percent, at $150.

For first quarter 2000, the No. 1 maker of chips used in mobile phones booked earnings per share of 55 cents, up 62 percent from a year ago.

The company said semiconductor gains were the primary driver behind a 69 percent increase in pro forma net income totaling $470 million.

Semiconductor revenues were up 30 percent year-over-year and 3 percent from fourth quarter 1999.

Gross profit margins also moved up to 49.5 percent versus 45.6 percent in last year's first quarter.

"Internet and communications applications continued to be our largest growth drivers reinforcing the importance of programmable digital signal processors (DSPs) and analog products to the Internet age," said Texas Instruments chairman, president and CEO Tom Engibous in a statement.

Dallas-based Texas Instruments supplies about 60 percent of the DSPs used in cell phones.

DSPs are specialized chips that transform audio and visual signals into digital format used by computers.

Engibous said that during the quarter Texas Instruments moved into high-volume production of DSPs for broadband applications, announcing two, new high-performance DSPs with lower power requirements.

In a conference call with analysts, chief financial officer Bill Aylesworth said Texas Instruments wasn't experiencing component shortages that have plagued other communications gear makers in recent months.

Looking forward, TI said it expects second-quarter revenues and per-share earnings to exceed those in the first as the company enters a seasonally strong period in all its business segments.

Broadband communications, which include digital subscriber line (DSL) and cable modems, also should continue to grow rapidly, TI said.

DSL is the technology that turns ordinary phone lines into broadband pipes speeding Internet downloads from 50 to 100 times faster than conventional dial-up modems.

Texas Instruments expects the growing demand for faster Internet connections to accelerate the growth in DSL subscribers from 4 million this year to 30 million in 2003.