Texas Instruments has posted a smaller fourth-quarter loss than expected. The company predicts it will break even in the current quarter because semiconductor sales are growing after a long slump. Texas Instruments lost $116 million compared to last year’s profit of $665 million.
The results were driven by the resumption of revenue growth in its Semiconductor business after three consecutive quarters of decline. In the first quarter of 2002, the company expects revenue to be about level with the fourth quarter of 2001, and earnings per share should return to about breakeven.
TI’s fourth-quarter revenue declined 3 percent sequentially, to $1786 million, as seasonally lower revenue from educational calculators offset gains from Semiconductor. Semiconductor revenue rose 3 percent sequentially as expected growth in DSP was augmented by stabilization in other semiconductor product areas. Fourth-quarter pro forma loss per share was $0.06.
For 2001, pro forma revenue was $8201 million, down 31 percent from the previous year. Semiconductor revenue was $6784 million, down 34 percent from a year ago. Pro forma earnings per share (EPS) were $0.12, compared with $1.22 a year ago.
Cash flow from operations was $780 million in the fourth quarter, and free cash flow was $544 million. TI decreased accounts receivable to $1198 million, resulting in a reduction of days sales outstanding to 60, compared with 65 at the end of 2000 and 71 at the end of the third quarter. Also, TI reduced its inventory by $149 million, to $751 million. Days of inventory were reduced to a three-year low of 50, compared with 71 at the end of 2000 and 58 at the end of the third quarter.
2001 was a tough year, but it ended on a much more positive note than it started. Despite the harsh environment, we made great strides in increasing our customer focus and technology leadership with aggressive R&D and equipment upgrades, said Tom Engibous, TI chairman, president and CEO. TI is coming out of the downturn stronger. We’re the only company shipping DSPs that operate at 600 megahertz, twice that of our nearest competitor. We began shipping copper-based products, ramped up 130-nanometer process technology and installed our first 300-millimeter wafer production line. At the same time, we maintained a strong balance sheet, and our actions cut about $600 million out of TI’s costs on an annualized basis. As the market recovers, TI’s revenue growth should fall through to the bottom line at a high rate.