(Bloomberg) – Texas Instruments Inc. projected revenue in the current quarter that beat analyst estimates, saying that orders have not shrunk as much in the coronavirus pandemic as they did in the last recession. However, chipmaker executives cautioned that the positive outlook is not a sign that the economy is on the rise.
“It seems clear that things are a little shaky in the world economy,” Chief Financial Officer Rafael Lizardi said in an interview on Tuesday. “My job is not to find out where the world economy is going, it is to put IT in the best position no matter what happens.”
Lizardi and her colleagues faced a barrage of questions in a conference call from analysts trying to find out if the unexpected force in orders came from Texas Instruments customers trying to buffer against possible supply disruptions or a pickup in global demand for Electronic products.
“Frankly, the reality is that we don’t know,” said Lizardi. Texas Instruments has more than 100,000 clients and “some of them don’t know either,” he said.
The company’s projected earnings will be $ 1.14 to $ 1.34 per share, in revenue from $ 3.26 billion to $ 3.54 billion, in the period ending in September. On average, analysts predicted earnings of 98 cents and sales of $ 3.07 billion, according to data compiled by Bloomberg.
Texas Instruments has the largest customer list and largest product catalog in the industry. The company is the first major American manufacturer to report earnings. Its scope offers investors a vision of the demand for everything from space hardware to home electronics.
“The business has certainly struggled and is beginning to show signs of life again,” said Logan Purk, an analyst at Edward Jones. Still, the pandemic and continued trade conflicts between the United States and China may affect demand in the near future, he said.
Covid-19 diseases have shut down factories and transportation around the world, putting unprecedented strain on a global supply chain that supplies components to electronics manufacturers only when they need it. Chip consumers, everyone from automakers to Apple Inc., may now want stocks to protect themselves against future outages and ensure they can continue to manufacture.
The chipmaker said it would keep production running and create its own inventory to make sure it can meet demand.
Texas Instruments “did not experience the depths of the recession we saw in the 2008 recession,” Dave Pahl, head of investor relations, said in the conference call. Still, “we remain cautious about how the economy might behave in the years to come,” he said.
In the second quarter, net income increased to $ 1.38 billion, or $ 1.48 per share, from $ 1.31 billion, or $ 1.36, a year earlier, the Dallas-based company said in a statement. Revenue fell 12% to $ 3.24 billion.
Stocks rose approximately 1% in extended trading after closing at $ 135.48 in New York. The stock has gained 5.6% this year, lagging behind the advance of the Philadelphia Stock Exchange Semiconductor Index of 13%.
(Updates with comments from CFO in second paragraph)
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