·	TI Revenue Down 8% Sequentially and 4% from Year Ago

·	EPS of $0.35

·	Revenue Growth Expected to Resume in 2Q07

 

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Revenue in the first quarter was $3.12 billion. This was a decrease of 8 percent from the prior quarter due to a broad-based decline in demand. Compared with a year ago, revenue decreased 4 percent primarily due to lower demand for DSP products that more than offset higher demand for analog products.

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Analog product revenue of $1.25 billion was down 5 percent from the prior quarter due to a broad-based decline in demand. Compared with the year-ago quarter, analog revenue increased 2 percent as a decline in analog revenue for wireless applications was more than offset by broad-based increases in other analog products, especially high-performance analog. Revenue from high-performance analog products declined 5 percent from the prior quarter and increased 8 percent from a year ago.

o	DSP product revenue of $1.16 billion was down 5 percent from the prior quarter and down 10 percent from a year ago due to lower demand for a broad range of products.

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TI’s remaining Semiconductor product revenue of $713 million was 17 percent lower than the prior quarter due to declines in DLP® products, royalties, microprocessors and standard logic that offset growth in microcontrollers. Royalties declined because new patent license agreements that were signed in the prior quarter included non-recurring catch-up payments. TI’s remaining Semiconductor revenue decreased 5 percent from the year-ago quarter as declines in microprocessors, DLP products and standard logic more than offset growth in royalties and microcontrollers.

·	Gross profit was $1.63 billion, or 52.3 percent of revenue. This was a decrease of $103 million from the prior quarter and a decrease of $30 million from the year-ago quarter due to lower revenue.

·	Operating profit was $831 million, or 26.7 percent of revenue. This was a decline of $77 million from the prior quarter and a decline of $52 million from the year-ago quarter primarily due to lower gross profit.

·	Semiconductor orders were $3.08 billion. This was an increase of 3 percent from the prior quarter due to higher demand for DSP products and a decrease of 10 percent from the year-ago quarter due to broadly lower demand.

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TI introduced a new high-performance analog product that will enable a range of portable electronic products to draw power from new energy sources, such as solar and micro-fuel cells. The DC/DC boost converter can operate at the industry's lowest input voltage of less than 0.3 volt with high efficiency.

·	TI demonstrated a prototype DLP pico-projector small enough to integrate into mobile devices, such as cell phones and digital cameras. This innovation will give manufacturers a new and enhanced display option for their devices.

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TI launched its “LoCosto ULC” single-chip platform for the ultra low-cost cell phone market. This platform enables cell phone manufacturers to include more features in their products, including an enhanced color display, FM stereo, MP3 ring tones and playback, and camera functionality. The new platform will include the industry’s first single-chip GSM/GPRS cell phone products to be manufactured using 65-nanometer process technology and is expected to sample in the second quarter of 2007.

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TI extended its OMAP™ 3 platform with products that allow cell phone manufacturers to scale their product offerings to address a range of performance levels and price points. The products bring “life-like” 3D graphics to the handset and create a mobile gaming experience comparable to today’s handheld gaming devices. In addition, the products are the industry’s first application processors to play 720p high-definition video on cell phones.

·	Revenue was $76 million. This was a decrease of $2 million from the prior quarter and an increase of $2 million from the year-ago quarter.

·	Gross profit was $45 million, or 59.0 percent of revenue. Gross profit was even with the prior quarter and increased $4 million from the year-ago quarter primarily due to a combination of higher revenue and product cost reductions.

·	Operating profit was $16 million, or 20.6 percent of revenue. This was a decrease of $3 million compared with the prior quarter due to higher SG&A expense. It was an increase of $3 million from the year-ago quarter due to higher gross profit.

·	Market demand for semiconductors, particularly for analog chips and digital signal processors in key markets such as communications, entertainment electronics and computing;

·	TI’s ability to maintain or improve profit margins, including its ability to utilize its manufacturing facilities at sufficient levels to cover its fixed operating costs, in an intensely competitive and cyclical industry;

·	TI’s ability to develop, manufacture and market innovative products in a rapidly changing technological environment;

·	TI’s ability to compete in products and prices in an intensely competitive industry;

·	TI’s ability to maintain and enforce a strong intellectual property portfolio and obtain needed licenses from third parties;

·	Expiration of license agreements between TI and its patent licensees, and market conditions reducing royalty payments to TI;

·	Economic, social and political conditions in the countries in which TI, its customers or its suppliers operate, including security risks, health conditions, possible disruptions in transportation networks and fluctuations in foreign currency exchange rates;

·	Natural events such as severe weather and earthquakes in the locations in which TI, its customers or its suppliers operate;

·	Availability and cost of raw materials, utilities, manufacturing equipment, third-party manufacturing services and manufacturing technology;

·	Changes in the tax rate applicable to TI as the result of changes in tax law, the jurisdictions in which profits are determined to be earned and taxed, the outcome of tax audits and the ability to realize deferred tax assets;

·	Losses or curtailments of purchases from key customers and the timing and amount of distributor and other customer inventory adjustments;

·	Customer demand that differs from company forecasts;

·	The financial impact of inadequate or excess TI inventories to meet demand that differs from projections;

·	Product liability or warranty claims, or recalls by TI customers for a product containing a TI part;

·	TI’s ability to recruit and retain skilled personnel; and

·	Timely implementation of new manufacturing technologies, installation of manufacturing equipment and the ability to obtain needed third-party foundry and assembly/test subcontract services.