Tech Stock Under Pressure: Texas Instruments Incorporated (NASDAQ: TXN)

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Texas Instruments Incorporated (NASDAQ: TXN) stock lost over 3.3% on 21st October, 2020 (as of 9:56 am GMT-4; Source: Google finance) after the company posted third quarter of FY 20.

During the quarter, Analog grew 18% and Embedded Processing grew 19% sequentially. On a year-over-year basis, Analog grew 7% and Embedded Processing declined 10%. The Other segment fell 19% from a year ago, mainly due to lower calculator sales or COVID-19 impacted back-to-school sales. The company generated cash flow from operations of $1.4 billion in the quarter. Capital expenditures incurred were $146 million in the quarter. Free cash flow on a trailing 12-month basis was $5.2 billion. The company had $5.5 billion of cash and short-term investments at the end of the third quarter. TI inventory dollars had fallen down $64 million from the prior quarter, and days were 137. Distribution-owned inventory declined in the third quarter by about $100 million.

TXN in the third quarter of FY 20 has reported the adjusted earnings per share of $1.45, while adjusted revenue growth of 1 percent to $3.82 billion in the third quarter of FY 20. The revenue was higher than expected and grew 18% sequentially, with significant strength from the rebound of automotive and growing demand from personal electronics. Gross profit in the third quarter was $2.5 billion, or 64% of revenue. From a year ago, gross profit margin contracted 60 basis points. Operating expenses in the quarter had increased by 2% to $793 million, from a year ago. The company delivered the operating profit was $1.6 billion in the third quarter, or 42% of revenue. Operating profit was up 1% from the year-ago quarter.

Additionally, the company has declared a quarterly cash dividend of $1.02 per share of common stock, payable November 16, 2020, to stockholders of record on October 30, 2020. In the third quarter, the company paid $825 million in dividends and repurchased $15 million of the stock. In total, the company had returned $6.4 billion in the past 12 months, or 123% of free cash flow.

For the fourth quarter, the company expects TI revenue to be in the range of $3.41 billion to $3.69 billion and earnings per share is expected to be in the range of $1.20 to $1.40.

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