Texas Instruments Q4 Preview: Cooling Semiconductor Demand Could Impact Results

by Trefis Team
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Texas Instruments (NYSE: TXN) is expected to publish its Q4 results on January 23, reporting on a quarter that is likely to see some slowdown in demand hurting the company’s revenue growth. Below, we take a look at some key trends to watch when the company reports earnings. We have also summarized our expectations for TI in our interactive dashboard, which outlines what to expect from TI’s full-year results .

Growth Will Slow Over The Quarter

Texas Instruments has guided for EPS of between $1.14 and $1.34 per share for the quarter, with revenues projected to come in at $3.6 billion to $3.9 billion, implying that they would be almost flat year-over-year (at the mid-point), ending a string of about ten quarters of year-over-year revenue growth. While the company didn’t provide much color on the exact reasons for the slowing growth rates, it noted that it was being impacted by a slowdown in most end markets. Moreover, the ongoing trade war between the United States and China could also be impacting demand, as customers could be hesitant to stock up on components that they may not be able to deploy due to any potential disruptions. While the company has indicated that it would be more circumspect about its operating expenses to manage a downturn, it indicated that it wouldn’t scale back on its long-term R&D plans.

Focus On Industrial And Automotive Sectors

We will be focusing on the performance of the company in the Industrial and Automotive segments, which are likely to be the biggest drivers of its long-term growth, due to the increasing semiconductor content in these industries. These sectors could be lucrative to TI, considering their longer product life cycles, diverse sales, and less capital-intensive manufacturing. During the third quarter, the company noted that automotive revenues grew by double-digits from a year ago, while Industrial demand slowed to upper-single-digit growth levels.

 

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