Texas Instruments 3Q16 Earnings Call Notes

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Texas Instruments’ (TXN) on Q3 2016 Results
David Pahl

Overview of demand

“the automotive market remained strong. We’ve got five sectors inside of that market and most of them had grown double-digit. Industrial demand improved and encouraging part of that was it was very, very broad-based and we had most of the sectors growing. Inside the personal electronics that was even and that was despite continued year-over-year declines in demand from one customer, but I think that speaking to the diversity of our product portfolio and our customer base, we were able to offset that with growth elsewhere inside of personal electronics. And then communications equipment grew from a year ago was even sequentially. And lastly, we did see growth in enterprise systems as well. ”

Personal electronics doing well outside of one customer

“Yes, at that level we’ve had PCs come in year-over-year about even which is an improvement from what we saw. I think that outside of that one customer we’ve actually seen really broad based growth. And so I think that all the classical areas inside a Personal Electronics are doing well.”

Improvement in industrial demand

” I think as we talked about last quarter we did see an improvement in industrial demand it actually had been flat for several quarters year-on-year, so we were encouraged by that. This quarter we’ve built on that a little bit and like last quarter it was very, very broad-based. I won’t try to go in and try to predict how long that will last or carryforward, but I definitely would say that we were encouraged as we saw most of those sectors growing.”

Inventories lean but stable lead times

“So if we look into the distribution channel inventory is actually decreased by about a half a week and it’s currently very, very low levels at about four weeks and that’s pretty similar to what we saw a year-ago. So again, we just we believe that that inventory level just reflects an environment of really good product availability and we’ve got you know good inventories on our books available to be able to ship. We continue to have very stable lead times and those things kind of taken together just drive very high customer service metrics. So customers in general are getting products when they want to have them. So and I’ll just make the reminder too that four weeks of inventory is just structurally lower because of the consignment programs that we have at our major distributors.”