Updated from 4:25 p.m. EDT

The first quarter was a good one for

Texas Instruments

(TXN) - Get Report

, as the component maker turned a loss into a profit on improving sales.

The Dallas-based company earned $117 million, or 7 cents a share, in the quarter, compared with loss of $38 million, or 2 cents a share, in the year-ago quarter. Texas Instruments' revenue grew nearly 20% over the year-ago quarter, to $2.19 billion.

The company's results topped Wall Street expectations. Analysts had been expecting TI to earn 6 cents a share on $2.14 billion in revenue, according to a survey by Thomson Financial/First Call.

Shares of Texas Instruments closed regular trading up 28 cents, or 1.7%, to $17.22.

Despite the company's improved performance, TI announced plans to cut about 1,250 jobs over the next 21 months in its semiconductors and sensors and controls departments. The company plans to take a second-quarter charge of about $40 million, or 2 cents a share, related to the restructuring.

Including that charge and a $26 million amortization expense, TI expects to post earnings of about 8 cents a share in the second quarter. The company expects second-quarter revenues to jump about 7% sequentially from the just-completed quarter.

TI's cost structure improved significantly in the first quarter compared with the year-ago period. The company's gross profit margin, which measures the difference between what the company charges for its products and what it pays suppliers for raw materials, grew 5.9% basis points to 39.3% of sales. TI attributed the improvement to higher utilization of its semiconductor factories and decreased depreciation expenses.

Meanwhile, the company reduced its research and development and sales, general and administrative expenses as a portion of revenue. Overall research expenses increased from $388 million in the year ago quarter to $408 million in the just completed quarter. But as a portion of sales, such expenses dropped from 21.3% to 18.6% year-over-year.

Sales and administrative expenses also increased overall, to $301 million from $267 million a year ago. But they declined as a percentage of sales from 14.6% a year ago to 13.7% in the just-completed quarter.

Although TI's sales and earnings are still down from where they were two years ago, the company's prospects seem to be improving. The company received $2.3 billion in orders in the first quarter, up 10% from the fourth quarter and up 20% from the year-ago period. Semiconductor orders at the company were $1.91 billion in the first quarter, representing a 9% increase from the fourth quarter and 24% jump from the first quarter of 2002.

"So we're well up from the trough. It was really a normal March, which is an important revenue quarter," CFO Bill Aylesworth told TSC. "It did not fall off even though there were global issues; that did not affect our revenues and did not appear to affect our customers."

"Semiconductors did better than expected in the first quarter, with better than expected

sales of DSPs and somewhat better sales in digital light processing. I think both are trends that will continue in the 4% or so sequential growth we're forecasting for semiconductors in the second quarter," he said.

But not everything improved for TI in the quarter. The company's inventory levels jumped 14.8% compared with the first quarter of 2002 and the days the company held inventory increased to 60 days from 57 days in the year ago period.

In a conference call with investors, TI officials said they weren't overly concerned with the increase in inventory days, saying that the company's figures compare favorably with competitors. Meanwhile, the company has built up its inventory of semi-finished products in response to customers giving the company shorter lead times on their orders, they said.

TI expects to cut about 800 jobs in its sensors and controls business by the end of 2004. By the middle of next year, the company expects to have cut about 450 jobs in its semiconductor business. In addition to the $40 million second-quarter charge, the company expects to take another $60 million in charges related to the restructuring through the end of next year.

The restructuring should result in $80 million in annual savings, TI said. Greater productivity at its semiconductor factories have made cuts in that department possible, with less employees needed to run the operations. Meanwhile, cuts within the sensors and controls business are being made to reduce staff at the division's Attleboro, Mass. headquarters and to move production facilities closer to customers, the company said.