DALLAS—It’s all about the outlook, even for companies performing well. Texas Instruments Inc. was reminded of this Wall Street maxim as it reported an 11-percent rise in third-quarter net income to $702 million and a 13-percent rise in revenue to $3.76 billion from the year-ago quarter—but forecast a weak fourth quarter. TI’s stock was down 2.3 percent this morning as a result.
Analysts had projected revenue of $3.8 billion for third quarter. For fourth quarter, TI projected revenue between $3.46 billion and $3.75 billion, below analysts’ expectations.
Orders for TI’s chips in the third quarter declined and its inventories rose, according to the company; apparently handset vendors that use TI’s chips have already stocked up for the pivotal fourth quarter, typically the top revenue-producing quarter of the year.
The company said that the mobile-phone market is weaker than expected and that low-end phones, which produce less profit for TI, are leading sales while sales have slowed for advanced, 3G handsets that use more profitable chips. Indeed, last week Nokia Corp. said that its profits in third quarter had dropped as margins shrank, based on slow sales of advanced handsets in mature markets and brisk sales of low-cost phones in emerging markets.
