Texas Instruments’ shares dropped nearly 7.5%, hitting $185.52 on Friday, marking the biggest one-day decline since March 2020. The stock fell as the company reported a weaker-than-expected first-quarter earnings forecast, citing slower demand and higher manufacturing costs. Earnings per share were projected to be between 94 cents and $1.16, but analysts had expected $1.17 on average, with the midpoint at $1.05.
The electronics industry remains in a slump, hurting the company’s sales of about $3.74 billion to $4.06 billion. The chipmaker, which leads the U.S. semiconductor market, relies heavily on industrial equipment and vehicle manufacturers for revenue.
Executive Haviv Ilan acknowledged that demand is still weak, particularly in the automotive sector, where growth in China isn’t as strong as hoped. Despite expectations of a stronger global economy, Texas Instruments sees uneven recovery across its divisions.
Analysts noted that while some companies are outperforming, Texas Instruments remains a key indicator of global economic health due to its diversified portfolio and reliance on slower-moving sectors like energy infrastructure.
Looking ahead, the company is considering ways to cut costs by reducing output at some facilities but warns this could harm profits further. With earnings in the fourth quarter beating expectations, Texas Instruments is navigating a challenging season despite weaker first-quarter results.
Source: https://finance.yahoo.com/news/texas-instruments-outlook-signals-chip-210618016.html