Cheap phones to drag on TI’s revenues

DALLAS-A slowdown in wireless chip sales forced Texas Instruments Inc. to trim its fourth-quarter revenue outlook from between $3.46 billion and $3.75 billion to between $3.35 billion and $3.5 billion
The company said semiconductor revenues are expected in the range of $3.28 billion and $3.42 billion, compared with the previously stated range of $3.39 billion to $3.66 billion.
TI’s lowered expectations are most likely due to decreases in mobile phone chip orders among Japanese phone makers as well as Nokia Corp., which is TI’s biggest customer and the world’s top cell phone producer. Nokia has said it expects fourth-quarter sales to include more low-end phones instead of higher-end phones as sales catch on in emerging markets.
TI’s Investor Relations Manager Ron Slaymaker said the company in October announced it planned to make adjustments to respond to the changing chip environment. Due to its lowered revenue expectations, TI decreased production at its factories and cut its corporate travel and hiring budget, Slaymaker said.
In addition, Slaymaker commented TI has insulated its profit margins to some extent as its revenue decreases by sourcing a large portion of its production from third-party foundries and by adjusting production. He noted that distributors of TI’s chips have reduced the amount of inventory they keep on hand, and many stock less than eight weeks worth of chips for production.
TI’s stock dipped briefly after the news but was up 23 cents to $30.61 per share in mid-afternoon trading.