DALLAS-Texas Instruments Inc. honed its financial estimates for the first quarter, projecting a narrower range of solid sales, from $3.22 billion to $3.35 billion, compared with its earlier projection of $3.11 billion to $3.38 billion. TI also estimated earnings per share from ongoing operations in the 31 cents to 33 cents per share range, a bump up from prior estimates of 29 cents to 33 cents per share.
Qualcomm Inc., the other 800-pound gorilla in the wireless chip space, raised its guidance on second quarter earnings and upped its quarterly dividend.
Qualcomm shares rose 2 percent on its news, while TI shares dropped 3 percent.
Both bits of news bore out the two chipmakers’ December forecast of improving chip sales in early 2006. In December, Qualcomm’s Chief Executive Officer Paul Jacobs promised strengthening results due to sales of W-CDMA handsets in Europe and CDMA2000 1x EV-DO-equipped handsets in North America, Japan and Korea.
The news from TI and Qualcomm appears to presage a positive situation for handset vendors and others in that value chain as well; component shortages traditionally have been a kink in handset availability, thus potentially limiting retail sales.
In TI’s case, analysts surveyed by Thomson First Call predict the Dallas-based company will report a first quarter profit of 32 cents per share on $3.27 billion in sales, right up the middle of the company’s own projections. That is relatively good news, given that in January the company reported that some chip shipments were delayed due to testing processes. On Qualcomm’s side, the company’s new estimate that it expects to ship 47 million to 48 million chips in the first quarter led it to raise its estimates of earnings and share the proceeds with investors, increasing its quarterly dividend by 33 percent. Qualcomm projects second-quarter earnings of 40 cents to 41 cents per share on revenue of $1.75 billion to $1.82 billion. That’s a solid up-tick from previous forecasts of 35 cents to 37 cents per share on revenue of $1.63 billion to $1.73 billion.
