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October 25, 2010, 5:19 PM EDT
By Ian King and Ari Levy
Oct. 25 (Bloomberg) -- Texas Instruments Inc., the second- largest U.S. chipmaker, forecast smaller fourth-quarter sales than some analyst had estimated, citing a slowdown in consumer- electronics spending.
Revenue will be $3.36 billion to $3.64 billion, Dallas- based Texas Instruments said today in a statement. The midpoint of that range fell short of the $3.52 billion average estimate of analysts, according to data compiled by Bloomberg. Profit will be 59 cents to 67 cents a share, the company said, compared with a projection of 63 cents.
Chief Executive Officer Rich Templeton said consumer demand is cooling, hurting sales of computers and televisions, even while industrial demand remains ?especially strong.? Texas Instruments is the biggest maker of analog chips, which go into everything from barcode scanners to military radar systems, making its earnings a bellwether of demand for electronics and industrial machinery.
?It?s not tremendously disastrous, but it?s not phenomenal either,? said Adam Benjamin, a Boston-based analyst for Jefferies & Co., who recommends buying the shares. ?Business is a little bit tough.?
Texas Instruments fell 20 cents to $28.78 in extended trading following the announcement. The shares, up 11 percent this year, had closed at $28.98 earlier today on the New York Stock Exchange.
Third-quarter net income rose 60 percent to $859 million, or 71 cents a share, from $538 million, or 42 cents, a year earlier. Sales climbed 30 percent to $3.74 billion.
Chinese Factory
The company is trying to steal market share from rivals by lowering the cost of its production and expanding overseas. On Oct. 15, Texas Instruments announced the purchase of a plant in China, letting it make semiconductors there for the first time. Texas Instruments also has bought plants and equipment in Japan and is beefing up a factory in Richardson, Texas, near its headquarters.
On Sept. 9, the company lowered the upper end of its forecast range for third-quarter profit and sales, citing weaker-than-expected demand for parts used in personal computers and televisions. That raised concerns that manufacturers had a glut of inventory.
Templeton is getting the company out of the market for digital signal processors that manage radio functions in mobile phones -- an area Texas Instruments once dominated. He?s focusing instead on analog chips, where the company expects to win more orders and grow faster, Templeton has said.
Texas Instruments ranked second to Santa Clara, California- based Intel Corp. among U.S. chipmakers last year.
(Texas Instruments will hold a conference call at 4:30 p.m. New York time to discuss the results. Call +1-913-312-0416 and give the passcode 5423174 or go to {LIVE } to listen.)
--Editors: Nick Turner, Stephen West
To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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Oct. 25 (Bloomberg) -- Texas Instruments Inc., the second- largest U.S. chipmaker, forecast smaller fourth-quarter sales than some analyst had estimated, citing a slowdown in consumer- electronics spending.
Revenue will be $3.36 billion to $3.64 billion, Dallas- based Texas Instruments said today in a statement. The midpoint of that range fell short of the $3.52 billion average estimate of analysts, according to data compiled by Bloomberg. Profit will be 59 cents to 67 cents a share, the company said, compared with a projection of 63 cents.
Chief Executive Officer Rich Templeton said consumer demand is cooling, hurting sales of computers and televisions, even while industrial demand remains ?especially strong.? Texas Instruments is the biggest maker of analog chips, which go into everything from barcode scanners to military radar systems, making its earnings a bellwether of demand for electronics and industrial machinery.
?It?s not tremendously disastrous, but it?s not phenomenal either,? said Adam Benjamin, a Boston-based analyst for Jefferies & Co., who recommends buying the shares. ?Business is a little bit tough.?
Texas Instruments fell 20 cents to $28.78 in extended trading following the announcement. The shares, up 11 percent this year, had closed at $28.98 earlier today on the New York Stock Exchange.
Third-quarter net income rose 60 percent to $859 million, or 71 cents a share, from $538 million, or 42 cents, a year earlier. Sales climbed 30 percent to $3.74 billion.
Chinese Factory
The company is trying to steal market share from rivals by lowering the cost of its production and expanding overseas. On Oct. 15, Texas Instruments announced the purchase of a plant in China, letting it make semiconductors there for the first time. Texas Instruments also has bought plants and equipment in Japan and is beefing up a factory in Richardson, Texas, near its headquarters.
On Sept. 9, the company lowered the upper end of its forecast range for third-quarter profit and sales, citing weaker-than-expected demand for parts used in personal computers and televisions. That raised concerns that manufacturers had a glut of inventory.
Templeton is getting the company out of the market for digital signal processors that manage radio functions in mobile phones -- an area Texas Instruments once dominated. He?s focusing instead on analog chips, where the company expects to win more orders and grow faster, Templeton has said.
Texas Instruments ranked second to Santa Clara, California- based Intel Corp. among U.S. chipmakers last year.
(Texas Instruments will hold a conference call at 4:30 p.m. New York time to discuss the results. Call +1-913-312-0416 and give the passcode 5423174 or go to {LIVE } to listen.)
--Editors: Nick Turner, Stephen West
To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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