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Texas Instruments Narrows Q3 View

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Recently, Texas Instruments (TXN - Free Report) , or "TI," narrowed its revenue and earnings expectations for the third quarter of 2013.

The chipmaker now expects sales of $3.15 billion–$3.29 billion versus its previous guidance of $3.09 billion–$3.35 billion. The earnings outlook has also been narrowed to 51 cent–55 cents per share from the previous guidance of 49 cents–57 cents.

Though the chipmaker has tightened its guidance range, the midpoint remains unchanged. According to data compiled by Bloomberg, analysts expect sales of $3.23 billion, slightly above the midpoint of management’s guidance of $3.22 billion. However, earnings expectations of 53 cents were in line with management’s guidance.

Management stated that the company is seeing improving demand for its chips from industrial customers with automotive continuing to grow sequentially in the third quarter. TI said that the demand for chips used in handsets, game console and notebooks are returning to growth.

We believe that the slight increase in demand will increase the orders for the company, which will have a positive impact on the company’s sales.

Like other chipmakers, TI has struggled in recent quarters due to a slow global economy and weak consumer spending. To maintain growth momentum, the company responded in part by cutting costs and trying to expand the use of its application processors on embedded solutions for the automobile, industrial and other non-consumer markets, which have a longer life cycle.

Texas Instruments is one of the largest suppliers of analog and digital signal processing integrated circuits. The company’s compelling product line-up, increasing differentiation in its business, restructuring activities and lower-cost 300mm capacity should drive earnings in the longer term. In the second quarter, TI posted decent numbers, with top-line numbers surpassing our expectations.

Currently, Texas Instruments has a Zacks Rank #3 (Hold). Other stocks that are performing well at current levels include SanDisk , Syntel Inc. (SYNT - Free Report) and Silicom Ltd. , all carrying a Zacks Rank #1 (Strong Buy).

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