Texas Instruments has published a profit forecast for the first quarter of the current year, which turned out to be lower than analysts’ preliminary expectations regarding the dynamic of the corresponding indicator.
Currently, the mentioned manufacturer of analog chips grapples with an inventory buildup in its main automotive and industrial markets.
Against the background of a pessimistic forecast regarding the financial performance the value of the company’s shares, which have a history of more than 90 years, demonstrated the downward dynamic by falling about 4% in extended trading. It is worth noting that investors were disappointed with the expectations that the firm signaled. They were hoping for a rebound in the analog chip market.
Currently, the automotive market has struggled to clear existing chip inventory. It’s worth noting that appropriate efforts are being made in the context of weak demand in the end market. This circumstance is a factor of negative impact on the indicator of orders for chips manufactured by Texas Instruments. There is a prolonged analog slump stemming from stock-piling during the coronavirus pandemic. This state of affairs is also a factor impacting the situation in the industrial market, where chips are utilized to solve tasks such as factory automation.
Stifel analyst Tore Svanberg stated that there is still no real recovery in the analog market growth.
In the fourth quarter of 2024, Texas Instruments’ revenue from the industrial and automotive markets sequentially decreased by single-digit percentage points. China’s automotive market has failed to help the company amid overall weakness.
The firm’s revenue in the analog segment increased by 2% in the last quarter of 2024. It is worth noting that during the previous eight quarters, the corresponding indicator was on a downward trajectory.
Texas Instruments predicts that its earnings in the first quarter of 2025 will be fixed in the range of 94 cents to $1.16 per share. According to data compiled by LSEG, the analysts’ average estimate envisaged that the mentioned figure would be $1.17 per equity.
Elevated inventory levels across the markets forced Texas Instruments to reduce factory loads. In this case, it means such an indicator as the quantity of products being manufactured. The company spreads fixed costs out over lesser output.
Inventory as of the end of the fourth quarter of 2024 amounted to $4.5 billion. This indicator is $231 million higher than the figure recorded in the previous quarter.
Texas Instruments’ overall revenue for the last three months of 2024 was $4.01 billion. Analysts predicted that the corresponding figure would be recorded at the $3.88 billion mark. The company’s operating profit for the fourth quarter of 2024 was $1.37 billion. Net income of the analog chip maker for the mentioned period was fixed at the $1.2 billion mark.
As we have reported earlier, TSMC Posts Revenue.