Dallas: Texas Instruments will close two of its older computer-chip factories, one in Houston and one in Hiji, Japan, and lay off about 1,000 workers to cut costs.
The company announced the cutbacks Monday in its fourth-quarter earnings report. Its results topped analyst estimates, but the company offered tepid forecast for the first quarter of this year.
Texas Instruments shares gained $1.11, or more than 3 per cent, to $34.30 after the earnings and layoff announcements.
The planned layoffs represent about 3 percent of the 34,800 workers that Texas Instruments Inc. employed as of September 30. Texas Instruments picked up about 5,000 additional workers four months ago when it completed its $6.5 billion acquisition of another chip maker, National Semiconductor.
Closing the two factories will save Texas Instruments about $100 million annually. The Houston plant is 42 years old while the Japan factory opened 32 years ago. The closures are to occur in the next 18 months. Production will be shifted to other Texas Instruments plants.
Texas Instruments will absorb $215 million in charges to pay for the closures. About $112 million of that amount was recorded in the fourth quarter. The remainder will be scattered through 2013.
Despite the charges, Texas Instruments still fared better in October through December than analysts and its own management anticipated.
CEO Rich Templeton said the pleasant surprise stemmed from improving demand for most of the company's products, leading him to believe that the company is moving beyond a downturn that undercut its financial performance for most of last year.
The company, which is based in Dallas, earned $298 million, or 25 cents per share, in the fourth quarter. That was a 68 per cent drop from net income of $942 million, or 70 cents per share, at the same time in 2010.
Wall Street had been bracing for a steeper decrease to 23 cents per share, according to FactSet.
The past quarter's earnings were lowered by a charge of 16 cents per share to account for the residue of National Semiconductor and the plant closure charge, which worked out to 7 cents per share for the period.
Fourth-quarter revenue dipped 3 percent from the previous year to $3.42 billion, but was about $160 million high than analysts forecast on average.
The company projected its earning per share for the three months ending in March will range from 16 cents to 24 cents. Analysts had been expecting 32 cents per share. Texas Instruments believes its first-quarter revenue will range from $3 billion to $3.28 billion. Analysts projected first-quarter revenue of $3.22 billion, according to FactSet.
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