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Texas Instruments Announces Pricing of Senior Notes Due 2029

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Texas Instruments Incorporated (TXN - Free Report) or TI recently announced an offering of senior unsecured notes aggregating $750 million. The notes carry an interest rate of 2.250% and are scheduled to mature on Sep 4, 2029.

The company stated that the transaction proceeds will be used for general corporate purposes.

Barclays Capital Inc., BofA Securities, Inc., J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Mizuho Securities USA LLC, Morgan Stanley & Co. LLC and MUFG Securities Americas Inc. are acting as joint book-running managers for the purpose.

Texas Instruments Incorporated Price and Consensus

 

Cash Position

At the end of second-quarter 2019, its cash and short-term investments totaled $4.2 billion compared with $4.1 billion at the end of the prior quarter. Long-term debt was approximately $4.6 billion, down from $5.1 billion in the first quarter.

The company generated $1.8 billion in cash from operations, spending $284 million on capex, $863 million on share repurchases and $722 million on cash dividends. Free cash flow at the end of the second quarter was $1.51 billion.

We believe that the company has a strong balance sheet, which will help it to capitalize on investment opportunities and pursue strategic acquisitions, further improving prospects. In our view, the senior notes’ offering will bring down the company’s cost of capital, in turn strengthening the balance sheet and supporting growth.

These notes should provide financial flexibility and propel long-term growth.

Bottom Line

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 business and low-cost 300mm capacity are anticipated to drive earnings over the long term.

Its margins should continue to expand owing to secular strength in auto and industrial markets, a stronger mix of analog and embedded processing products, benefits of restructuring actions and more than 300mm capacity coming online. Moreover, the semiconductor giant is poised to gain from the growing market for Internet of Things.

However, increasing competition from Analog Devices, NVIDIA Corporation and Applied Materials remains a concern.

Zacks Rank and Stocks to Consider

Texas Instruments currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Alphabet Inc. (GOOGL - Free Report) , Itron, Inc. (ITRI - Free Report) and Teradyne, Inc. (TER - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Alphabet, Itron and Teradyne is currently projected at 17.5%, 25% and 11.4%, respectively.

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