(01-22) 15:15 PST DALLAS, (AP) —

Texas Instruments Inc., the largest maker of chips for mobile phones, said Tuesday that its fourth-quarter profit rose 13 percent and sales reversed a yearlong decline.

The company posted net income of $756 million, or 54 cents per share, including a penny per share from a tax gain. That compared with $668 million, or 45 cents per share, a year earlier.

Analysts surveyed by Thomson Financial had expected earnings of 52 cents per share.

Revenue was $3.56 billion, down 3 percent from the third quarter and $20 million less than analysts had predicted. But sales grew 3 percent from the same quarter in 2006, which analysts consider a better yardstick.

The company said sales growth was strongest in its key markets of digital signal processors and analog chips used in a variety of electronic gadgets.

Dallas-based Texas Instruments forecast first-quarter earnings of 43 cents to 49 cents per share on revenue of $3.27 billion to $3.55 billion. Analysts were projecting profit of 45 cents per share on sales of $3.41 billion.

Vice President Ron Slaymaker called the increase in revenue from late 2006 Д after four straight quarters of year-over-year sales declines Д a turning point. He said the company expects revenue to grow faster this year.

“It looks like inventory is well-managed and remains lean, and near-term demand trends look strong,” Slaymaker said in an interview.

Slaymaker said the company was well-positioned if there is an economic slowdown. “We’re pretty optimistic about profitability,” he said.

The company plans to trim research and development spending by about 7 percent this year, to $2 billion, partly as the result of restructuring. Slaymaker said the company was being “prudent” because of the economic uncertainty but wasn’t jeopardizing any important work.

In December, Texas Instruments said fourth-quarter profit looked on track or even slightly higher than previous forecasts but that sales of its chips for wireless devices remained below usual seasonal strength.

Two of the company’s biggest customers, Nokia Corp. and LM Ericsson AB, are buying chips from other suppliers instead of just Texas Instruments.

The wireless business is critical to Texas Instruments. Deutsche Bank analyst Ross Seymore said before the company’s report that sales to wireless customers were likely stronger than expected for both ends of the market Д low-end phones in emerging markets such as China and India, and pricey advanced phones for consumers in developed nations.

Shares of Texas Instruments hit a 52-week low of $28 Tuesday before ending regular trading at $28.98, down 48 cents or 1.6 percent. In extended trading after the earnings report, they were up 67 cents, at $29.65. The shares have fallen by about one-fourth since July, when they hit a 52-week high of $39.63.

(02-09) 10:38 PST SUNNYVALE — Yahoo Inc.’s board plans to spurn Microsoft Corp’s $44.6 billion merger proposal, a source familiar with the matter said this morning.

The rejection, to be officially delivered to Microsoft on Monday, adds a dramatic twist to the takeover saga, which would combine two technology industry giants.

The decision by Yahoo keeps the Sunnyvale company independent, at least for now. In the past, executives made no secret of their desire to keep the company intact, but disappointing earnings and a depressed stock performance have made their Web portal an enticing acquisition target.

Yahoo’s board, which met Friday, has determined that the $31 per share offer Microsoft made is inadequate. The Wall Street Journal reported in its online edition today that the board is holding out for at least $40 per share, which would increase the overall value of the proposal by $12 billion.

E-mail Verne Kopytoff at vkopytoff@sfchronicle.com.

(12-24) 03:44 PST LONDON, United Kingdom (AP) —

Oil prices fell Monday amid light holiday trading, after rising more than $2 a barrel in the previous session on news of improved U.S. consumer spending.

At midmorning in Europe, light, sweet crude for February delivery was down 45 cents to $92.86 a barrel in electronic trading on the New York Mercantile Exchange.

Japanese financial markets were closed Monday for the emperor’s birthday, a national holiday, while trading on some other Asian markets ended early for Christmas Eve. Markets in the U.S. and many other countries will be closed Tuesday for Christmas.

On Friday, the Nymex crude contract rose $2.25 to settle at $93.31 a barrel after the U.S. government reported that consumer spending surged last month, raising hopes that the American economy will weather the crisis roiling credit markets and that demand for oil and gasoline will strengthen.

Oil prices were also supported by stocks, which rose Friday, and a slightly weaker dollar. Energy investors often view stock market moves as reflective of overall economic sentiment. Also, oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling. Many observers blame oil’s rise last month to near $100 on speculators driven to oil futures by the weaker dollar.

Crude futures have since retreated as OPEC boosted supplies and several forecasters cut demand predictions. But in recent weeks, prices have held generally to a range between $87 and $93, leading some analysts to conclude investors are seeking direction and may be poised to make another push for $100 a barrel in the new year.

Heating oil futures fell 1 cent to $2.5991 a gallon (3.8 liters) while gasoline prices dropped 0.45 cent to $2.375 a gallon.

Natural gas futures dropped 11.3 cents to $7.077 per 1,000 cubic feet.

In London, February Brent crude fell 48 cents to $091.98 a barrel on the ICE Futures exchange.