Texas Instruments Inc., the largest maker of chips for cell phones, on Monday revised first-quarter earnings and revenue targets to the higher end of its estimates, reflecting broad product strength.
TI's mid-quarter updates are closely watched as a bellwether for how the technology sector is performing, and its updated forecast came just minutes after two smaller companies boosted their outlooks on strength in the wireless industry.
The company's forecast was within analysts' expectations, and its shares were up slightly in after-hours trade. TI's digital processors are used in a range of products beyond phones, from television sets to portable music players.
Wireless companies have been generally optimistic on the prospects for 2004, as consumers embrace new phones with advanced media features and network operators expand their infrastructure.
"There were really no surprises," said David Wu, an analyst at Wedbush Morgan Securities.
Wu said there was much less uncertainty around TI going into the update than there was around Intel Corp., the world's largest chip maker, which last week lowered the midpoint of its revenue outlook for the quarter by $100 million on an oversupply of chips in Asia.
Dallas-based TI said it now expects revenue of $2.835 billion to $2.95 billion and earnings per share of 19 cents to 22 cents. It forecast revenue of $2.5 billion to $2.6 billion in its semiconductor division.
TI in late January said it expected earnings per share of 16 cents to 22 cents in the quarter on revenue of $2.72 billion to $2.95 billion. It had forecast semiconductor revenue of $2.4 billion to $2.6 billion.
Analysts surveyed by Reuters Research, a unit of Reuters Group Plc, were expecting earnings per share of 19 cents on revenue of $2.85 billion in the quarter.
"I would describe what we're seeing as pretty broad-based strength," Ron Slaymaker, the company's vice president of investor relations, said on a conference call.
Two smaller semiconductor companies, TriQuint Semiconductor Inc. and Tessera Technologies Inc., on Monday cited strong demand for wireless and communications chips and raised their targets. Tessera, a chip packaging company, said demand for wireless products will remain higher than previously anticipated this year.
Slaymaker said there were early positive signs for demand in the second quarter.
"I will say that visibility continues to improve for second quarter," he said.
Shares in TI were up at $30.75 on INET, after closing at $30.60 on the New York Stock Exchange. Technology stocks fell on Monday as investors awaited word of TI's forecast for signs of industry health.
