17 October 2008
Chipmaker downgraded ahead of third quarter report on concerns of wireless market share weakness.
Texas Instruments Inc. will report third-quarter results on Monday, with analysts expecting the chip giant to post 7% lower revenue as the tech industry reels from the uncertainty in the broader market.
The weakening economy, and concerns about TI's ability to maintain market share in the wireless sector prompted Collins Stewart to downgrade the company to a sell."Weakening trends across key end markets will likely cause TI to come in below mid-quarter guidance," analyst Ashok Kumar said in a research note.Analysts expect the chip maker to report earnings of 44 cents a share on revenue of $3.4 billion, according to a consensus survey by FactSet Research. For the year-earlier period, TI reported net income of $776 million, or 54 cents a share, on revenue of $3.66 billion.Analyst Tore Svanberg of Thomas Weisel Partners said he thinks TI will deliver in-line third-quarter results, but said,"We are incrementally concerned about the company's overall backlog visibility into the December quarter "He added,"While we believe TI's business is diversified, we are concerned that low visibility throughout the entire electronics supply chain is resulting in lower bookings activity than otherwise expected at this time of the year."TI surprised analysts by affirming its outlook, especially after a market-share warning from its biggest customer, Nokia Corp.In its revision, TI said it expects third-quarter revenue of $3.33 billion to $3.47 billion, compared with the previous range of $3.26 billion to $3.54 billion. The company also said it expects a profit of 42 to 46 cents a share, compared with the previous range of 41 to 47 cents.TI's dominant position in the market for cellphone chips has been shaken by the shift among some top customers to a multisupplier strategy. Nokia has decided to work with other suppliers such as Broadcom Corp. and STMicroelectronics NV.Ericsson also began working with other chip makers, including STMicroelectronics.
