Texas Instruments Inc. (TXN.O) reported the most sluggish revenue growth in four quarters due to less demand for its chips generally used in communications equipment which led to disappoint investors who were expecting strong results on automotive chips sales.
The Dallas based company’s shares dropped about 7 percent in late night trading on Tuesday as earnings failed to exceed Wall Street expectations for the first time in two or more years. Investors also reacted to dull forecast for current-quarter revenue.
The revenue of Texas Instruments Inc. rose to a near 10 percent in the fourth quarter, but its growth is expected to slow down to around 7 percent in the quarter ending March. This is based on the mid-point of the company’s forecast.
That is comparable to a growth of 12 percent to 13 percent each in the first three quarters of 2017.
Texas Instruments Inc. saw high demand for chips that are used in automobiles. However Chief Executive Officer Richard Templeton claimed that the business of chips used in communications equipment faced weak demand.
13 percent of the revenue of Texas Instruments Inc. was comprised of communications equipment in 2016. The automotive market has contributed 18 percent of the Texas Instruments revenue in 2016.
Because of tax-related expenses from new U.S. tax laws, Texas Instruments reported a 67 percent decline in profit to $344 million in the fourth quarter which ended Dec. 31.
The shares of the chip making company has increased nearly 15 percent this year after the 43 percent rise in 2017.