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Texas Instruments Forecasts Sales Below Estimates

Thursday, 08 Dec 2011 06:04 PM

Texas Instruments Inc., the second- largest U.S. chipmaker, gave a fourth-quarter sales forecast that fell short of analysts’ estimates, citing weaker demand for electronics components.

Revenue will be $3.19 billion to $3.33 billion, the Dallas- based company said today in a statement. Analysts on average had estimated sales of $3.41 billion, according to a Bloomberg survey. Shares declined as much as 6.9 percent in late trading.

Texas Instruments gets most of its revenue from analog chips, semiconductors that are key components in everything from missiles to washing machines, making its earnings a broad indicator of demand across the economy. In addition to concerns about sluggish demand for electronics, falling orders from telecommunications-equipment makers are hurting sales.

“There’s no confidence out there,” said Tore Svanberg, a San Francisco-based analyst at Stifel Nicolaus & Co. He recommends buying Texas Instruments stock, which he owns himself. “Distributors are still very cautious and are still drawing down inventory.”

In October, Texas Instruments predicted fourth-quarter revenue would be $3.26 billion to $3.54 billion. This is the first quarter that Texas Instruments is including its National Semiconductor Corp. acquisition in the forecasts. That transaction closed on Sept. 23.

Texas Instruments’ stock fell as low as $27.87 in extended trading. It had earlier declined 2.5 percent at the close in New York, leaving the shares down 7.9 percent for the year.

‘Broadly Lower Demand’

“The reductions are due to broadly lower demand across a wide range of markets, customers and products, except for wireless applications processors,” Texas Instruments said in the statement.

The company’s OMAP applications processor is the main chip in Amazon.com Inc.’s new Kindle Fire tablet and smartphones made by Motorola Mobility Holdings Inc. and other handset manufacturers. OMAP, or Open Multimedia Application Platform, chips are estimated to represent about 7 percent of Texas Instruments’ revenue, according to Chris Danely, an analyst at JPMorgan Chase & Co.

The European sovereign debt crisis and budget struggles in the U.S. are helping suppress consumer spending. The Bloomberg Consumer Comfort Index was at minus 50.3 in the period ended Dec. 4, after a reading of minus 50.2 the prior week. The gauge has been at minus 50 or worse for 11 of the past 12 weeks, an unprecedented stretch of pessimism in its 26-year history.

Fourth-Quarter Profit

Profit in the fourth quarter, including costs related to the acquisition of National Semiconductor, will be 21 cents to 25 cents a share, the company said today. In October, Texas Instruments forecast earnings of 28 cents to 36 cents a share.

Three of Texas Instruments’ largest customers are Avnet Inc., Arrow Electronics Inc. and WPG Holdings Ltd. -- all distributors of electronic components -- which account for a combined 23 percent of the company’s sales, according to Bloomberg data.

Texas Instruments ranked second behind Santa Clara, California-based Intel Corp. among U.S. chipmakers in total sales last year.

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Texas Instruments Inc., the second- largest U.S. chipmaker, gave a fourth-quarter sales forecast that fell short of analysts estimates, citing weaker demand for electronics components. Revenue will be $3.19 billion to $3.33 billion, the Dallas- based company said today in...
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Thursday, 08 Dec 2011 06:04 PM
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