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Chipmaker Texas Instruments hits bum note as revenue growth slows in fourth quarter

Increased sales of its automotive chips was offset by softer demand for its technology in communications equipment

self driving car
TI has benefited from automakers’ switch in focus towards self-driving and semi-autonomous cars

Texas Instruments Inc (NASDAQ:TXN) fell on Wednesday morning after the chipmaker posted its slowest revenue growth for four quarters.

The news disappointed investors, who had hoped that higher sales of its chipsfor use in the automotive industry for use in semi-autonomous cars would have led to a strong set of results.

As it was, Texas’ revenues rose by 10% in the final three months of 2017, hampered by softer demand for its technology in communication equipment. That compares with growth of between 12-13% in the first three quarters of last year.

In the current quarter through to the end of March, Texas said it expects growth to slow down once again to around 7% year-on-year.

Shares in the Dallas-based group fell 5.4% to US$113.42 early on Wednesday.

Texas also saw profits slump by two-thirds to US$344mln in the quarter ended December 31, largely as a result of a one-off hit from the new US tax laws.

Excluding the tax expense, the firm earned US$1.09 per share, in line with analyst expectations according to Thomson Reuters.

Like most companies, TI still expects the reforms to sharply reduce its effective tax rate over the longer run; down from 31% in 2017 to 18% this year.

Texas is guiding for revenues of between US$3.49bn and US$3.79bn in the current quarter, and earnings per share of between US$1.01 and US$1.17.

Quick facts: Texas Instruments

Price: 124.77 USD

Market: NYSE
Market Cap: $114.51 billion

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