Tech stock to watch: Texas Instruments Incorporated (NASDAQ: TXN)

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Texas Instruments Incorporated (NASDAQ: TXN) stock rose over 1.5% in the pre-market session of July 22nd, 2020 (Source: Google finance) post better than expected second quarter of 2020 update. The firm is focusing on R&D for new capabilities like those for ti.com, while ensure long term manufacturing capacity, particularly for the 2022 to 2025-time frame. Their Personal electronics segment rose 20% sequentially while surged 10% on a year-over year basis. Work from home trends drover the performance, with the firm well placed to capitalize the opportunity. Communications equipment also surged 20% as compared to the same quarter last tear. Analog delivered sequential and year-over-year growth, but embedded was down in both comparisons due to their planned decline in this portion of the business. Enterprise systems was up sequentially and year-over-year. The firm also has a solid balance sheet with $5 billion of cash and short-term investments at the end of the second quarter. They issued $750 million of debt with a coupon of 1.75% due in 10 years leading total debt of $6.8 billion with a weighted average coupon of 2.77%. The firm also repaid $500 million of debt due in second quarter and has no further debt due this year.

On the downside, Automotive business fell 40% sequentially and by 40% against the prior corresponding period. Excluding automotive, the business rose 8% sequentially but down 3% against prior corresponding period. But, the firm says there automotive market bottomed in May as North American and European assembly plants resumed operations. The industrial market rose 2% sequentially and 2% from pcp.

Overall revenue fell 12% yoy to $3.2 billion, during the quarter while Gross profit was $2.1 billion or 64% of revenue. But the firm controlled Operating expenses in the quarter by 4% yoy to $780 million. Net income in the second quarter was $1.4 billion, or $1.48 per share, which included a $0.33 benefit primarily for tax-related items. The group expects revenue in the range of $3.26 billion to $3.54 billion during the third quarter of 2020 while earnings per share to be in the range of $1.14 to $1.34.

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