Texas Instruments Inc reported results for the fourth quarter that show improvements following the company’s restructuring efforts and also announced the acquisition of an Israeli chip company. TI posted fourth-quarter net income of $189m, or $0.47 per share, on revenue down 17.9% at $1.99bn – a drop mainly due to the divestiture of the memory chip joint venture with Hitachi Ltd – compared to a net loss of $285m in the year-ago period. Results for the quarter include $72m in pre-tax operating charges associated with the disposal of European operations, without which the company would have seen earnings of $237m, or $0.59 per share. Wall Street was expecting just $0.54 per share. Results for the year-ago quarter, meanwhile, include charges of $461m for acquisitions and $42m for restructuring, as well as a $22m loss on the extinguishment of debt. For the full fiscal year, net income dropped 77.5% to $407m on revenue down 13.2% at $8.46bn and earnings per share fell 77.5% to $1.02. Full-year results for 1998 also include one-time charges totaling $477m and a gain of $83m from the sale of a joint venture. Full 1997 results, meanwhile, include charges totaling $603m and a one-time gain of $66m. The solid results for the quarter included semiconductor sales that increased 6% from the third quarter to $1.63bn, driven by record revenues in digital signal processing (DSP). During the quarter, TI’s DSP business grew 13% sequentially, the company said, reflecting gains in all market segments. The DSP business grew 29% in the fiscal year, faster than the overall DSP Market – a trend which TI reckons will continue. Semiconductor orders also rose 8% from the third quarter, with gains in almost all semiconductor product lines. Separately, in a move that will further strengthen its DSP business, the company announced that it is acquiring Tel Aviv-based company Butterfly VLSI Ltd for $50m – a move which it says will give it desirable expertise in the short-distance wireless communications market. Butterfly develops low-cost chipsets that enable radio frequency wireless communications in the 900 MHz and 2.4 GHz frequency bands. Sixty- person Butterfly was founded in 1992 and is primarily focused on research and development activities related to RF wireless technology. Looking ahead, TI expects modest sequential revenue growth in its semiconductor business in the first quarter, leading to moderate growth for the year, based on continuing strength in wireless and ongoing improvements in the hard disk drive and mass markets. The hard disk drive market is being pegged as a growing opportunity for TI. TI also said it expects 1999 earnings will reflect continued improvement in the overall semiconductor market and the ongoing benefit of the cost reductions realized from previously-announced restructuring. The company warned however, that in the first quarter any improvements may be largely offset by a planned transition to increased profit sharing for employees.
