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NEW YORK (TheStreet) -- Moderate third-quarter earnings and unexpectedly gloomy fourth-quarter guidance sent Texas Instruments (TXN)  shares tumbling 2.6% to $39.92 on Tuesday morning.

Though third-quarter earnings were lower year on year, the figures beat analysts' expectations. The semiconductor company reported earnings of 56 cents a share, 3 cents higher than Yahoo! Finance estimates, on revenue of $3.24 billion. Net income fell 20% to $629 million from $784 million in the year-ago quarter.

"Earnings per share were higher than expected due to better revenue and gross profit, tight expense control and discrete tax items," said CEO Rich Templeton in a statement.

Depressing the share price, however, was an unexpectedly low forecast revision for the fourth quarter. The Dallas-based company expects earnings per share of 42 cents to 50 cents a sharee on revenue between $2.86 billion and $3.1 billion. The decline is attributed to "legacy wireless" sales, such as discontinued mobile app processors, as the company unloads the division to focus on analog and embedded processing offerings.

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"At the mid-point of our fourth-quarter guidance range, revenue would decline 8% sequentially and be about even with the fourth quarter of 2012. Excluding legacy wireless revenue, which should decline to about $50 million in the fourth quarter, the mid-point of our outlook would deliver 8% growth from a year ago," said Templeton.

TheStreet Ratings team rates Texas Instruments Inc as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about its recommendation:

"We rate Texas Instruments Inc (TXN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, notable return on equity, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."