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Financial objectives
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Margins
We said several years ago that a company focused on Analog and Embedded Processing could deliver margins in the range of 55 percent gross margins and 30 percent operating margins.
Our company has made significant progress in this transition over the past few years; our margins have steadily improved and we are now operating in this range. Going forward, our margins will be impacted by product mix, lower costs and factory utilization.
We believe to sustainably increase our earnings per share over time, our focus now needs to shift to growing our top-line revenue. We have aggressive expectations for growth in our core markets, and we believe we have the right strategy, product portfolio and sales network to achieve these goals.
Operating expenses
To deliver the sustainable types of margins that we think we can achieve, we have to maintain discipline in our operating expenses, while continuing to invest for the future. Knowing where to focus those investments is a critical element of our future success.
In R&D, we are focusing our investments in our core businesses – Analog, Embedded Processing and the applications processors and connectivity products in our Wireless business – that offer TI high-growth potential and high profitability.
In Analog, we're focusing R&D investments on leadership process technologies that are allowing us to annually deploy hundreds of new leadership products. Farther out, we're looking at the technologies and materials that can be disruptive, breaking new ground in areas like ultra-low power or no power, medical and energy harvesting. In Embedded Processing, we've been increasing our investments in microcontrollers, the largest part of the market and where we have a comparatively smaller presence. With these investments, we increased our product portfolio by 3x by the end of 2010, compared with where we were in 2008. Finally, in Wireless, we're focusing R&D investments on products that serve the fast-growing smartphone market – applications processors and connectivity products.
In SG&A, we understand the importance of balancing cost discipline with making strategic investments that will fuel future growth and have consciously been expanding our sales force and applications support over the last several years. We expanded our sales force in most regions of the world as well as increased the technical support we provide customers by adding more analog applications engineers to work directly with customers in the field, especially in emerging regions.
We believe our sales force may be our greatest single competitive advantage that we have and will continue to invest in this area in order to win more business and better support our customers. Because of our size, we can invest more money in our sales force and have more of our support people working with customers on a daily basis. It gives us the opportunity to capture more customers and capture more dollars per customer, providing us with our most strategic advantage to grow.
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