Texas Instruments Drops After Q3 Earnings (TXN)

Texas Instruments (NASDAQ: TXN) is down more than two percent in after hours trading after reporting its third-quarter results.

The company's EPS came in at $0.56, just shy of the Street's estimate of $0.57. Despite this, earnings per share were still up eight percent from the year-ago period.

Revenue fared slightly better, coming in at $3.24 billion versus the estimated $3.23 billion. Sales were down four percent year-over-year, however.

"Our third-quarter performance reflects the positive structural changes we've made at TI over the past few years as we've focused on Analog and Embedded Processing," Rich Templeton, TI's chairman, president and CEO, said in a company release. "Our revenue in the quarter was up 6 percent sequentially. Excluding the legacy wireless products, revenue grew 10 percent sequentially. Our book-to-bill ratio was 0.97, consistent with an expected seasonal revenue decline in the fourth quarter.

"Earnings per share were higher than expected due to better revenue and gross profit, tight expense control and discrete tax items. Gross margin of 54.8 percent was an all-time high for TI, exceeding the prior record set in the third quarter of 2010, even though both revenue and factory utilization were lower. We believe this reflects the increased quality of revenue that comes from our focus on Analog and Embedded Processing and the efficiency of our manufacturing strategy."

Texas Instruments also announced that it expects to report a fourth-quarter EPS of $0.42 to $0.50 -- well below the Wall Street estimate of $0.51.

TI's sales estimates are also lower tan Wall Street's, with the company announcing Q4 expectations between $2.86 billion and $3.10 billion versus $3.12 billion.

Year-to-date, Texas Instruments is up 26 percent. The company has risen fairly steadily this year, though there have been a few dips during the spring and summer months. The stock is still trading well below its all-time high of roughly $83 achieved more than 13 years ago.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ