June 11 (Bloomberg) -- Texas Instruments Inc., the world's biggest maker of mobile-phone chips, said sales and profit will miss its highest estimates as demand for wireless network equipment and calculators declines. The shares fell in extended trading.

Second-quarter sales will be $3.36 billion to $3.51 billion, the Dallas-based company said today in a statement. That compares with an April estimate of $3.32 billion to $3.6 billion. Profit will be 40 cents to 44 cents a share, compared with an earlier forecast of 39 cents to 45 cents.

The report disappointed analysts, who had expected Texas Instruments to predict higher revenue after signs that mobile- phone sales were picking up. The new report lowers the midpoint of Texas Instruments' sales forecast to $3.44 billion, compared with an average estimate of $3.46 billion in a survey of analysts by Bloomberg.

``There's a disconnect,'' said Doug Freedman, an analyst for American Technology Research who rates the shares ``buy.'' ``There were expectations that they were going to take revenue higher. It's not showing up in TI's guidance.''

Shares fell as much as $1.09, or 3 percent, to $34.70 in extended trading after the results were announced. The company's stock rose 18 cents to $35.79 at 4 p.m. on the New York Stock Exchange. They have climbed 10 percent since April 23, when the company's previous forecast beat analysts' estimates.

`Timing Issue'

The company also reduced the high end of its estimate for education sales to $170 million from $200 million. Texas Instruments said retailers are delaying stocking its calculators for the back-to-school season.

``It's only a timing issue,'' company spokesman Ron Slaymaker said on a call with analysts. ``Revenue will shift from the second quarter into the third quarter.''

The company has seen weaker-than-expected demand for wireless equipment such as base stations, which handle mobile- phone calls, Slaymaker said. Chips for the most advanced mobile phones, meanwhile, are selling well, he said.

The announcement follows a report last week from National Semiconductor Corp. that its profit topped analysts' estimates. National also announced a $2 billion share buyback plan. The company's shares rose 15 percent on June 8, the most in six years. Analog Devices Inc., another chipmaker, also boosted its share buyback plan last week, raising it by $1 billion to $1.4 billion.

Higher Margins

Even at the top end of the sales forecast, Texas Instruments' revenue will be 5.1 percent lower than in last year's second quarter, when it was $3.7 billion. Profit also won't top the 47 cents the company reported a year earlier.

At a May 9 meeting with analysts, Chief Executive Officer Rich Templeton raised the company's goals for gross margin to 55 percent from 50 percent and operating margin to 30 percent from 25 percent. Gross margin is the percentage of sales left after production costs, while operating margin is the percentage after all operational costs are deducted.

The company makes a variety of semiconductors, which go into everything from televisions and medical devices to automobiles. About 40 percent of its chip sales come from mobile phones, and its biggest customer is Nokia Oyj, the world's largest maker of handsets.

Texas Instruments is losing market share in so-called baseband chips, the main semiconductors in mobile phones. Its share fell to 31 percent in 2006 from 33 percent the previous year, according to research firm iSuppli Corp. Qualcomm Inc., the second-largest maker of baseband chips, increased its share to 27 percent from 24 percent, iSuppli said.

The U.S. International Trade Commission ruled June 7 that handsets with new Qualcomm chips inside aren't allowed into the U.S. because they violate a patent of Broadcom Corp. Qualcomm and Verizon Wireless are asking the White House and an appeals court to reverse the ruling.

``If that order stands, it could benefit us,'' Slaymaker told analysts. The ruling may make wireless carriers more reluctant to depend on Qualcomm's technology, he said.

To contact the reporter on this story: Peter J. Brennan in Los Angeles at pbrennan3@bloomberg.net

Last Updated: June 11, 2007 21:26 EDT