Updated from 5:23 p.m. EST

Texas Instruments ( TXN - Get Report) beat the Street by a penny as fourth-quarter revenue jumped 14% on strength in the company's semiconductor division.

Still, the top line was at the low end of the company's guidance, as manufacturing constraints caused TI to leave some money on the table.

The company said Monday that it earned $655 million in the fourth quarter, or 40 cents a share, including a 3 cents-a-share charge related to stock-option expensing. Sales were $3.59 billion, within the $3.56 billion to $3.71 billion range the company provided in its December guidance update, but below the $3.63 billion midpoint.

The average estimate of analysts polled by Thomson First Call projected $3.64 billion in fourth-quarter revenue with 39 cents EPS, including the option expense.

TI blamed the revenue shortfall on a shortage of assembly test equipment at its chip manufacturing facilities. This created a bottleneck that prevented the company from shipping as many chips as it had promised its customers, the company said.

"If you look at what changed from the midquarter update in December, at that point we were planning on certain assembly expansion in test equipment that frankly we weren't able to get in on time," investor relations manager Ron Slaymaker told analysts during a conference call following the release of the financial results.

The company has ordered more equipment to rectify the problem, but Slaymaker acknowledged that the constraints could continue to affect the company in the current quarter, particularly if demand does not slow down.

"We're going to have to keep working hard just to keep up," he said.

Demand for the company's semiconductors was strong enough in the fourth quarter that TI saw revenue in the division increase 15% year over year, to $3.23 billion, even with the capacity constraints. Wireless and high-performance analog chips were the main engines of growth, as the consumer appetite for cell phones and electronics gadgets remained strong.

The robust semiconductor sales more than offset the seasonal decline in the company's calculator business, which fell 62% sequentially to $67 million. Gross margin for the quarter was 48.3%, down one percentage point from the third quarter, due mainly to the calculator business' seasonal revenue decline.

TI said sales in the current quarter will range between $3.11 billion and $3.38 billion, compared with the average analyst expectation of $3.46 billion. But the company said its revenue estimates do not include sales from the sensors and controls division, which TI recently announced it was selling. The company forecast first-quarter EPS between 29 and 33 cents, not including 3 cents for the discontinued operations of the sensors unit and four cents for stock option expensing.

"TI enters 2006 in excellent health," President and CEO Rich Templeton said in a statement accompanying the release. "Customer and channel inventories appear lean, and demand is solid."

The company also announced that its board has authorized a $5 billion stock buyback, in addition to TI's previously announced stock-repurchase authorizations.

For the year, TI had $2.32 billion in net income, or $1.39, on revenue of $13.39 billion.

Demand for the feature-rich 3G wireless phones that are becoming increasingly popular in Asia was the biggest driver of TI's annual wireless growth. The company doubled its shipments of application processors and tripled shipments of baseband modems for 3G phones, allowing TI to exceed its goal of generating $1 billion in annual 3G semiconductor revenue.

Revenue from the high-margin digital light processors used in televisions and projectors was down 8% in 2005, as the company recovered from an earlier inventory glut. But Slaymaker said the DLP business ended the year on a strong note, with revenue up 10% from the same time a year ago.

Following the announcement, shares of TI fell 58 cents, or 1.8% in after-hours trading, to $31.12 on Instinet.