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Texas Instruments (TXN), a chipmaker whose related companies include Intel (INTC) and Qualcomm (QCOM), reported results for the fourth quarter on Monday after the bell. Profit growth was incredible, but it's difficult to call the stock a buy at this time, at least based on price action.
Revenues increased a whopping 27%. Earnings came in at 52 cents per share. That was more than 100% better than the adjusted 21 cents per share earned in Q4 2008. Operational cash flow went down 10%, but overall, you've got to call this a much improved quarter (a note on cash flow: it pretty much covered capital expenditures, dividends, and share repurchases, which is good news).
When shareholders take a look at the full year, I think they'll really appreciate the most recent quarter. The declines seen for all of 2009, when juxtaposed with Q4, essentially paint a picture of a brighter future for the business.
Furthermore, the bottom-line results came in ahead of estimates. According to our preview, Texas Instruments was supposed to earn somewhere around 49 cents per share (it should be noted that the current income figure of 52 cents includes a tax benefit worth one penny per share, according to Reuters).
Okay, so I'm bullish on the fundamentals. But I'm not certain the market is going to take this stock higher in the short term.
During yesterday's after-hours session, Texas Instruments was weak on the earnings news -- not terribly weak, mind you, but down just over 1%.
Given current market action, I personally would abstain from buying shares right now. My favorite tech company in this category is currently Intel, so that does factor into my opinion on Texas Instruments. If you do have TXN on a watch list, try to buy on a good dip to acquire a margin of safety.
Disclosure: I don't own any company mentioned; positions can change without notice.
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