reported double-digit revenue growth and bigger profits on Wednesday, but that wasn’t enough for yield-hungry investors who decided to focus on the company’s forecast instead.
Shares of Texas Instruments retreated in the extended session, falling 4.4% after ending regular trading up 3.5% to $194.24. Shares are up 18% this year; the PHLX Semiconductor Index is also up 18%.
Texas Instruments, which makes chips for automotive, industrial, and personal electronics, reported second quarter net income of $1.9 billion, or $2.05 per share, compared to net income of $1.4 billion, or $1.48 per share. Sales rose 41% to $4.6 billion. Analysts had expected earnings of $1.84 per share on revenue of $4.36 billion.
Demand for many of the company’s chips grew during the quarter, slowing delivery to customers. Inventory remains low and the company is incrementally adding production capacity, executives said during a conference call. A new factory is to be opened next year.
Finance chief Rafael Lizardi told reporters and analysts the company does not know how long the global chip shortage will last.
“We have read that it will end soon, and others say it will continue for quite some time,” Lizardi said. “We’re not going to predict the fourth quarter, or even say anything about how long the cycle will last, because frankly, we don’t know.”
For the third quarter, the company expects revenues between $4.4 billion and $4.8 billion; the consensus estimate is $4.4 billion.
The company’s outlook indicates executives expect a strong quarter, Lizardi said.
With demand for chips far exceeding supply, investors expect semiconductor companies to far exceed earnings expectations and provide bullish guidance. Those who do not face the wrath of investors.
Write to Max A. Cherney at firstname.lastname@example.org