Chip maker Texas Instruments warned that its fourth-quarter results would fall far short of expectations, sending its shares down 5 per cent, in the latest sign that the economic crisis is hurting demand for everything from cell phones to industrial equipment.
TI, which has been losing customers to wireless rivals such as Qualcomm Inc and ST Microelectronics, also announced a plan to sell part of a unit that makes wireless baseband chips, which are the brains of mobile phones.
It also cited weak chip orders from all industries that buy its analog chips, which translate phenomena like sound and light into the ones and zeros of digital computer language.
"Not only do we have problems with the macro environment but we have a company going through a restructuring in the midst of it," said American Technology Research analyst Doug Freedman, adding that TI's guidance was off by a large amount.
TI forecast fourth-quarter revenue of $2.83 billion to $3.07 billion, below the average analyst forecast of $3.33 billion. It said earnings per share would be 30 cents to 36 cents, including items such as a 5 cent tax-related gain. Analysts had expected 43 cents, without the tax gain.
"It's gonna be about a nine-month hurdle for them to see a rebound at this point," said Charter Equity Research analyst John Dryden.
TI's analog chips are used in everything from consumer electronics and home appliances to industrial equipment and automotives. The company cited a bigger slowdown in orders from automotive than other industries, but said no one segment was to blame for the weakness.
TI Chief Financial Officer Kevin March told Reuters that orders had worsened throughout the third quarter, and were expected to fall further in the fourth quarter.
"It's very broad-based," he said of the downturn. "We're expecting the quarter's
going to be down quite a bit. It's a reflection that the order trend has progressively gotten worse."
He said that while it was hard to predict demand into the first quarter, the company was prepared for revenue to decline from the fourth quarter much more than the typical 1 per cent after the holiday shopping season.
Reuters