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Investing.com -- Texas Instruments Incorporated (NASDAQ:TXN) reported stronger-than-expected second-quarter results, lifted by improving demand in its industrial business, but shares fell sharply in premarket trading on a soft profit outlook.
Shares were down 11.4% at $190.37 in the premarket trady as of 04:19 ET (08:19 GMT).
Revenue rose 16% from a year earlier to $4.45 billion, in line with the high end of its guidance and above analysts’ estimate of $4.35 billion.
Earnings per share came in at $1.41, including a 2-cent benefit not in the company’s prior forecast.
The company said revenue was up 9% sequentially, led by a “continued broad recovery in industrial,” which is its largest end market. Net income for the quarter was $1.30 billion.
For the third quarter, Texas Instruments expects revenue between $4.45 billion and $4.80 billion and EPS of $1.36 to $1.60.
That compares with analysts’ estimates of $4.55 billion in revenue and $1.49 in EPS.
Free cash flow over the past 12 months totaled $1.8 billion, while capital spending reached $4.9 billion. The company returned $6.7 billion to shareholders in that period.
"We recommend adding TXN positions after shares fell in after-hours trading," said Evercore ISI analyst Mark Lipacis.
"We observe that semis generally and TXN specifically often give back some of their initial outperformance early in the recovery cycle, and that these early-cycle corrections have proven to be good opportunities to buy the stock," he wrote.
Meanwhile, Stifel analysts said that while Texas Instruments is showing near-term signs of a cyclical recovery, the durability of that rebound remains uncertain.
"The potential tariff impacts on the company’s recent recovery remains difficult to assess and quantify,” they said, and pointed out that order rates appeared to slow during the second quarter, with a deceleration between the first and second halves. However, analysts believe order trends have somewhat stabilized since then.
(Additional reporting by Vahid Karaahmetovic.)