DALLAS (AP) -- Texas Instruments Inc.'s second-quarter earnings slipped 13 percent as the company took a hit from repairing earthquake damage to its Japanese factories and its decision to stop making a type of wireless chip.
Still, the results were stronger than expected, and TI's shares ticked higher, up 10 cents to $31.57 in extended trading.
Guidance included a lower range than many analysts were expecting, and the company cautioned it was only expecting "modest" growth in the third quarter. But investors appeared to take heart in comments from CEO Rich Templeton that demand in Asia is increasing and that higher demand elsewhere could materialize.
"We expect growth in the third quarter, but because of mixed macroeconomic and market signals we are prepared for a broader-than-normal range of growth possibilities," Templeton said in a statement. "We note that production at some computing and consumer manufacturers appears lukewarm even though we're heading into the back-to-school and holiday seasons."
TI's results come at a fractious time for the computer industry. The personal computer market in the U.S. and Europe is contracting, while sales of smartphones -- a key TI market -- are surging. There are now more smartphones sold every quarter than PCs, an important inflection point for the industry. Emerging markets are driving growth.
Against that backdrop, TI's comments that it resumed production ahead of schedule at factories that were damaged in the deadly March 11 earthquake and tsunami in Japan and that demand from Japanese customers is increasing encouraged investors about TI's prospects for a full recovery. The company also said it expects its proposed $6.5 billion acquisition of National Semiconductor Corp. to close before the end of the year.
In the second quarter, net income was $672 million, or 56 cents per share, ahead of the 54 cents per share that analysts polled by FactSet were expecting. A year ago, the Dallas semiconductor maker earned $769 million, or 62 cents per share.
Revenue was $3.46 billion, ahead of the $3.44 billion analysts were expecting. The company reported revenue of $3.5 billion a year earlier.
A reason for the 1 percent revenue decline was a 23 percent drop in revenue in TI's wireless division. TI blamed lower revenue from "baseband" chips, which help phones connect to cellular networks. That is a business TI is exiting.
However, other parts of the wireless division, specifically "applications processors," grew. Those are the central processors for smartphones.
For the third quarter, TI said it expects earnings of 55 cents to 65 cents per share. Analysts were expecting 64 cents per share. Revenue should be $3.4 billion to $3.7 billion. Analysts expected $3.63 billion.
The company's shares fell 31 cents to close at $31.47 in the regular session before the earnings were released.