Chipmaker Texas Instruments late Tuesday beat Wall Street's targets for the second quarter thanks to strong automotive chip demand. But TXN stock fell after the company gave a disappointing outlook for the current period.
The Dallas-based company earned $1.87 a share on sales of $4.53 billion in the June quarter. Analysts polled by FactSet had predicted TI earnings of $1.76 a share on sales of $4.37 billion. On a year-over-year basis, TI earnings declined 24% while sales slid 13% amid a cyclical downturn in demand.
"Similar to last quarter, we experienced weakness across our end markets with the exception of automotive," Chief Executive Haviv Ilan said in a news release.
For the current quarter, TI predicted earnings of $1.80 a share on sales of $4.55 billion. That's based on the midpoint of its prediction. Wall Street called for earnings of $1.91 a share on sales of $4.59 billion in the third quarter.
TXN Stock: Breakout, Then Breakdown
In after-hours trading on the stock market today, TXN stock dropped 2.7% to 181.10. During the regular session Tuesday, TXN stock rose 1.2% to close at 186.08.
Texas Instruments makes analog and embedded processing chips for markets such as industrial, automotive, personal electronics, communications equipment and enterprise systems.
TXN stock has been volatile lately. On June 13, it hit a buy point of 178.19 out of a cup-with-handle base, according to IBD MarketSmith charts. But trading volume was only a bit above average and the stock closed below that buy point for the day — both red flags.
On June 23, TXN stock tripped a stop-loss sell rule when it crashed through its 50-day moving average line and went into a 7%-8% sell zone. However, after that breakdown it soon climbed back above its recent buy point.
Texas Instruments ranks 10th out of 32 stocks in IBD's semiconductor manufacturing industry group, according to IBD Stock Checkup. TXN stock has a so-so IBD Composite Rating of 77 out of 99. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
