Texas Instruments Cuts First-Quarter Sales, Profit Forecasts
Texas Instruments Inc. (TXN), the world’s largest maker of analog semiconductors, reduced its first- quarter sales and profit forecasts, citing lower demand for products that let wireless devices connect and run applications.
Revenue will be $2.99 billion to $3.11 billion, the Dallas- based company said today in a statement. Analysts on average had estimated $3.16 billion, according to data compiled by Bloomberg. Net income will be 15 cents to 19 cents a share, Texas Instruments said, compared with projections of 21 cents.
Texas Instruments is the top supplier of chips that provide key functions in electronic devices ranging from missiles to mobile phones, making the company’s earnings an indicator of demand across the economy. Vice President Ron Slaymaker said the weakness in wireless was in connectivity products and OMAP processors, which run programs in smartphones and tablets. Some clients have cut their expectations for demand and reduced inventory, he said on a conference call.
Slaymaker declined to identify which Texas Instruments customers, or how many, had cut back orders.
Tore Svanberg, an analyst at Stifel Nicolaus & Co., said Texas Instruments may be indicating that Amazon.com Inc.’s Kindle Fire tablet hasn’t sold as well as Amazon had projected. The device uses a Texas Instruments processor and its connectivity chips, he said.
“It does seem like everything else is tracking apart from a few customers in wireless,” said Svanberg. He recommends buying Texas Instruments stock, which he owns himself.
Drew Herdener, an Amazon spokesman, didn’t immediately return messages left seeking comment.
In January, Texas Instruments had projected first-quarter revenue would be $3.02 billion to $3.28 billion, with profit of 16 cents to 24 cents a share.
Avnet Inc. (AVT), Arrow Electronics Inc. (3020) and WPG Holdings Ltd. (3702), three of Texas Instruments’ largest customers, are all distributors of electronic components. They account for a combined 18 percent of the company’s sales, according to supply- chain data compiled by Bloomberg.
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