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conference date: January 22, 2007 @ 2:30 PM PT
for quarter ending: December 31, 2006 (4th quarter)
This is not an analyst conference summary yet: it is just based on the press release. The Webcast did not work for me, even though I tried it on two different computers with 2 different players (Microsoft and Realplayer). I guess some of the high-tech boys at TI are a bit too high for the rest of us.
Overview: Not a good quarter. Revenues down from prior quarter, up just 4% from year-earlier.
Basic data:
Revenue for the quarter was down 8% sequentially to $3.46 billion, but up 4% from Q4 2005.
Net income was $671 million.
Earnings per share (EPS) from continuing operations were $0.45, including a 5 cent tax benefit and 3 cents in stock-based compensation expense.
Gross profit was $1.75 billion, or 50.5% of revenue, down $184 million from prior quarter.
Cash and equivalents ended at $3.72 billion, down $467 million from prior quarter and $1.61 billion from end of 2005. In Q4 $1.13 billion was used to repurchase 37 million shares and $59 million was paid in dividends.
Guidance:
Q1 2007 expectations are: total revenue of $3.01 to $3.28 billion.
In 2007 a a whole TI expects the tax rate to be 28%. R&D expense $2.3 billion, capital expenditures $0.9 billion, depreciation $1.0 billion.
Conference Highlights:
Revenue decline was broadly-based, with demand unseasonably weak. Production was limited to reduce inventories. Q1 2007 will be challenging because customers want to hold lower levels of inventory and the wireless phone market is skewed to low-cost phones.
Sensors & Controls business sold in April 2006 is reported as discontinued operations.
Education & Productivity segment renamed Education Technology. This segment had revenue of $78 million, down $104 million sequentially due to seasonal decline in calculator sales. But this was up 11% from Q4 2005.
Will reduce employment by about 500 people in 2007. Restructuring charges totalling $55 million will be evenly distributed across quarters.
R&D expense $556 million or 16% of revenue. SG&Q expense $425 million or 12.3% of revenue. Capital spending was $214 million. Depreciation was $249 million.
Operating profit was $767 million or 22.1% of revenue, down $163 million from prior quarter. Other Income was $70 million due to a settlement with Italy.
Accounts receivable ended at $1.77 billion, down $315 million sequentially. Days sales outstanding were 46. Inventory was $1.44 billion, a reduction of $54 million sequentially.
2006 overall tax rate was 27%.
Analog revenue was down 4%. DSP revenue down 11%. Other semiconductor revenue was up 2% due to higher royalties on microprocessors, microcontrollers, DLP, and logic chips.
Q&A:
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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.
Copyright 2007 William P. Meyers
