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EARNINGS

TI Posts Profit of $12 Million in 2nd Quarter

July 28, 1986

Texas Instruments, a leading manufacturer of computer microchips, reported a profit of $12.3 million in the second quarter, against a loss of $3.9 million last year. The company said the gain came from the favorable effects of the falling dollar and a decline in pension costs under a change in accounting rules.

The company's results marked its third consecutive quarter of improvement since the semiconductor industry's worst slump in history and its first profitable period since the first quarter of 1985.

Revenue was unchanged from last year at $1.24 billion.

Wall Street expectations about Texas Instruments' second quarter had varied wildly, with estimates ranging from a slight loss up to a profit of $36 million.

Anticipation of the company's results, which were released after the close of the market Friday, drove the stock up $5.87 1/2 to close at $108.87 1/2.

Texas Instruments said its semiconductor business "operated slightly below break even" in the quarter, although the performance improved from a year earlier. The company said semiconductor orders were significantly above the 1985 second quarter but down slightly from this year's first quarter, as orders from distributors declined. Sales billed were up from both periods, it added.

Total profits from continuing operations rose to $27.6 million from $5.7 million a year earlier.

The company said its backlog of orders at June 30 was $3.9 billion, up $414 million from a year earlier.

The company closed plants and laid off 9,000 workers when it was faced with 1985 losses of more than $60 million in its semiconductor unit.

Texas Instruments' new strategy calls for shifting its focus from high volume to high-profit chips, providing better customer service and spending heavily to develop the 1-megabit memory chip.

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