Oct 18, 2001
TI's third-quarter revenue was $1.85 billion, down 9% from the second quarter and slightly better than the company's outlook issued in July for a decline of 10 to 15%.
Pro forma loss per share was 3 cents, one cent better than the consensus of First Call financial analysts. Orders, which had fallen 10% sequentially in the second quarter, declined 4% sequentially in the third quarter to $1638 million.
Semiconductor orders were about even with the second-quarter level.
"TI's overall book-to-bill for semiconductors continued to rise sequentially, and our DSP book-to-bill exceeded one for the second consecutive quarter. DSP revenue was up 10% sequentially and orders were up 11% sequentially," said Tom Engibous, chairman, president and CEO, in a released statement.
"Orders for high-performance Analog have turned the corner and increased 10% sequentially. As things stand now, it appears that third quarter will mark the bottom for orders, and the floor for revenue should be set in the fourth quarter.
"We came into the downturn with a strong balance sheet, and we're managing our operations to keep it that way," Engibous said.
Inventory was reduced by $182 million from the end of the second quarter. Despite the decline in revenue, days of inventory were reduced to 58 from 72 at the end of the secondquarter. Cash flow from operations was $334 million, and free cash flow was $22 million. The company also repurchased $152 million of company stock.
According to generally accepted accounting principles (GAAP, operating loss was $245 million, compared with an operating profit of $526 million in the year-ago period and an operating loss of $298 million in the prior quarter.
Fourth-quarter revenue is expected to decline about 10% sequentially, mostly due to normal seasonal declines in Educational & Productivity Solutions (E&PS) as well as continued weakness in Semiconductor.
In semiconductor, revenue will decline about 5% as continued growth in DSP is more than offset by declines in other products.
Pro forma non-operating income will decline about $10 million reflecting lower interest rates.
"We are encouraged that we were able to deliver slightly better than expected results compared to our July outlook," said Bill Aylesworth, senior vice president, treasurer, and chief financial officer of TI, during a conference call with financial analysts.
Growth in the third quarter in its wireless products, which were up 16%, was the greatest contributor to an overall increase of 10% in DSP for the quarter, he said.
Other DSP-related products to show improvement included devices sold for use in digital still cameras and hard disk drives.
Sales to broadband applications, such as cable and DSL modems, were down 52% sequentially due primarily to DSL customers needing to reduce excess inventory accumulated in the first half of the year. Overall, however, the sales to the broadband market remains higher than a year ago, Aylesworth said.
For the fourth quarter, TI expects revenue in its three major DSP markets, wireless, mass market, and broadband, to up be flat or up slightly, he said.
