Texas Instruments Exceeds Lowered Estimates, Sets Job Cuts

Texas Instruments(TXN Quote) topped Wall Street's earnings estimates for the first quarter, and the company set plans to cut 2,500 workers, or 6% of its workforce.

The chipmaker said it earned $317 million, or 18 cents a share, for the quarter, excluding charges. Twenty-two analysts polled by Thomson Financial/First Call were expecting the company to earn 16 cents in the period, after it warned of shortcomings in the early months of the year. The company earned $549 million, or 31 cents a share, in the fourth quarter, and $494 million, or 28 cents a share, in the year-ago period.

Revenue sank to $2.53 billion, an 8% decrease from the $2.76 billion in the year-ago quarter and down 17% sequentially. In late February, analysts had been expecting revenue of $3.3 billion.

Shares of Texas Instruments, which is based in Dallas, gained 99 cents to $34 at the 4 p.m. close of New York Stock Exchange trading and continued upward, rising 5.9% to $36 in recent after-hours Instinet activity.

But the company expects revenue to decline about 20% sequentially in the second quarter as semiconductor customers work through excess inventories. The company also plans to begin the job cuts in the second quarter.

"We are in one of the sharpest decelerations that our industry has experienced, and it requires that we move fast to make hard but prudent business decisions," the company said in a statement. "Despite the short-term market conditions, the long-term megatrends in society continue to move toward a networked world of high-speed communications that depend on the real-time capabilities of DSP and analog semiconductors.The economy will get better."