The share price of Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) rose 8.37% on the Tel Aviv Stock Exchange (TASE) and a further 2.3% today without any announcement whatsoever from the company, ahead of the publication of its financial statements next week. The surge follows the release of Texas Instruments' results, which beat market estimates.
Texas Instruments rose 7% on Wall Street yesterday, after the company's results confounded the market's projections. The company posted a $1.31 billion profit, $1.36 per share, which compares with $1.41 billion, $1.40 per share, in the second quarter of last year. The second quarter profit was nevertheless $0.07 higher than the company's guidance. In the top line, revenue fell from $4.02 billion in the second quarter of 2018 to $3.67 billion in the second quarter of this year. The analysts predicted a profit of $1.22 per share on $3.6 billion revenue.
"Texas Instruments works with tens of thousands of end customers and sells hundreds of thousands of products. This is a company that has an overview of the whole market, which is why it has such an effect. There is a strong correlation between other semiconductor companies and this company. Its markets are similar to those of Tower - industrial, sensors, and cellular markets - which is probably the reason for Tower's rises today. In general, the semiconductor market has not been outstanding recently, and there are signs that the logjam is breaking up. I wouldn't say that the trade war is over, but the US tone of voice on Huawei has become softer. The guidance for the third quarter provided by the large companies, such as Intel and Broadcom, left out Huawei because of concern about measures against it by the US. This is now easing up," Oppenheimer senior equity analyst Sergey Vastchenok writes.
Tower Semiconductor is scheduled to publish its second quarter financial results next week. "I can't remember when Tower published results so early in the season," Vastchenok adds. "This can also be a good sign, meaning that it closed the quarter earlier than usual. There is usually a reason that it publishes later than others, because it’s a complicated company with divisions spread around the world, so early publication is likely to be a positive indication."
Tower's revenue in 2018 totaled $1.3 billion, 7% less than in 2017. Its operating profit declined 29% to $155 million, and its net profit tumbled 54% to $136 million. Free cash flow in 2018 was $143 million. Cash flow from current activity totaled $313 million, while investment in plant and fixed asset amounted to $170 million.
Published by Globes, Israel business news - en.globes.co.il - on July 25, 2019
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