Texas Instruments Inc (NASDAQ:TXN) stock fell 3.95% (As on October 25, 11:26:20 AM UTC-4, Source: Google Finance) after the company gave a disappointing revenue forecast for the current period, indicating that demand remains sluggish for a broad range of electronic components, including industrial equipment. The cash flow from operations of $6.5 billion for the trailing 12 months again underscored the strength of the business model, the quality of the product portfolio and the benefit of 300-mm production. Free cash flow for the same period was $1.6 billion. Over the past 12 months the company invested $3.7 billion in R&D and SG&A, invested $4.9 billion in capital expenditures and returned $5.6 billion to owners. Texas Instruments has argued that its products have a long shelf life, up to a decade. That means an accumulation of inventory is less of a problem than for other chipmakers, and it may even help the company respond more rapidly when demand returns. Even so, Texas Instruments has slowed down operations at some factories to guard against building up an excess of unused parts. But not running its plants at full capacity is taking a toll on profitability and will require the company to take charges in the current quarter. There are concerns about the automotive market as well. Though it’s been holding up for Texas Instruments, strikes at US plants by the United Auto Workers could ultimately threaten demand. But the average age of cars on the road has risen, meaning that at some point there will be demand for new vehicles. And new vehicles have an increasing number of electronic functions that need chips to support them.

TXN in the third quarter of FY 23 has reported the adjusted earnings per share of $1.85, beating the analysts’ estimates for the adjusted earnings per share of $1.82. The company had reported 14 percent decline in the adjusted revenue to $4.53 billion in the third quarter of FY 23, missing the analysts’ estimates for revenue of $4.55 billion. During the quarter, automotive growth continued and industrial weakness broadened.

Revenue in the fourth quarter will be $3.93 billion to $4.27 billion. That compares with an average analyst estimate of $4.49 billion. Profit will be $1.35 to $1.57 a share, versus a prediction of $1.76. The chipmaker will continue its investments and has budgeted $5 billion a year for new plants and equipment until 2026.