Texas Instruments Inc., the second- largest U.S. chipmaker, lowered the upper end of its forecast range for third-quarter profit and sales, indicating that semiconductor demand may be slipping as economic growth slows.
Third-quarter profit will be 66 cents to 72 cents a share on sales of $3.62 billion to $3.78 billion, Texas Instruments said today in a statement. Analysts had predicted profit of 69 cents a share and revenue of $3.69 billion on average, according to a Bloomberg survey. In June, the company had forecast profit of as much 74 cents and sales of as much as $3.85 billion.
Texas Instruments is the biggest maker of analog chips, which go into everything from barcode scanners to aircraft flight-control systems, making its earnings a bellwether of demand for electronics and industrial machinery. Customers are facing lower-than-projected demand for electronics such as PCs and TVs, said Ron Slaymaker, vice president of investor relations.
“We’re seeing an inventory adjustment that really is kind of weaker than we expected in demand by our customers for their products,” he said on a conference call with analysts.
Last month, bigger rival Intel Corp. cut its targets for the third quarter, citing slower-than-expected consumer demand.
Texas Instruments fell as much as 2.1 percent in extended trading to $23.35 after gaining 16 cents to $23.84 at 4 p.m. on the New York Stock Exchange.
While the company trimmed the upper end of its forecasts, it raised the bottom end of each. It previously had said profit would be at least 64 cents on revenue of at least $3.55 billion.
PCs and TVs
“The PC market has a history of relatively quick correction and we believe that is what we’re in,” said Slaymaker. “For TVs, I think the correction really ties to lower-than-expected flat- screen demand that was associated with the World Cup, as well as what I would characterize as tepid consumer acceptance of some of the new 3-D television models.”
Texas Instruments Chief Executive Officer Rich Templeton is getting out of the market for digital signal processors that manage radio functions in mobile phones -- an area the company once dominated. Texas Instruments is focusing instead on analog chips, where it expects to win more orders and grow faster, he has said.
On Aug. 27, Intel cut its sales target range to about $11 billion from as high as $12 billion, citing slowing demand for PCs in mature markets.
Texas Instruments ranked second to Intel among U.S. chipmakers in total sales last year.
(Texas Instruments held a Webcast on the update at 5:30 p.m. New York time. For a replay, go to http://www.ti.com/ir)