TI's Tepid Guidance Overshadows 3Q Beat

Texas Instruments (NYSE:TXN) beat the Street on Monday with a 20% decline in third-quarter profits, but the chip maker’s below-consensus outlook for the fourth quarter spooked shareholders.

Shares of TI slumped about 3% in extended trading Monday evening as investors look beyond the stronger-than-expected bottom-line results.

The company said it earned $679 million, or 56 cents a share, last quarter, compared with a profit of $784 million, or 67 cents a share, a year earlier. Analysts had called for EPS of 53 cents.

Revenue fell 4% to $3.24 billion, essentially matching the Street’s view of $3.23 billion.

“Our third-quarter performance reflects the positive structural changes we've made at TI over the past few years as we've focused on Analog and Embedded Processing,” TI CEO Rich Templeton said in a statement.

Looking ahead, TI projected fourth-quarter EPS of 42 cents to 50 cents on revenue of $2.86 billion to $3.10 billion. Even the high end of that range would miss estimates from analysts for EPS of 51 cents on sales of $3.12 billion.

The company said it plans to update its quarterly guidance on December 9.

TI said it returned about $1 billion to shareholders during the third quarter through dividends and stock buybacks.

After touching 52-week highs during regular trading, shares of Dallas-based TI fell 2.88% to $39.81 in after-market trading on Monday. The slump sets TI up to trim its 2013 rally of almost 33%.

In July, TI posted a 48% jump in second-quarter profits that topped forecasts from analysts even as revenue fell by 9%.