TI warns on slower growth in 2007

Texas Instruments Inc. reported modest gains in the fourth quarter-revenue up 4 percent, profit up 2 percent over the year-ago quarter-but it will cut 500 jobs as it prepares to hunker down for a period of weak chip demand by the mobile phone industry. TI is the overall leader in semiconductor sales for mobile phones.
The semiconductor vendor said that fourth-quarter revenue reached $3.46 billion, up 4 percent over the year-ago quarter. Annual revenue reached nearly $14.3 billion, a double-digit jump from the year-ago’s $12.3 billion. Net income for the quarter was $668 million, up from $655 million in the year-ago quarter. Annual net income reached $4.3 billion, nearly double the prior year’s $2.3 billion.
“As expected, demand in the fourth quarter of the year was unseasonably weak, and we limited production to reduce our inventories,” said Rich Templeton, TI’s president and CEO.
Templeton said that growth in the wireless market is in low-tier products, not the higher-priced, full-feature phones that drive revenue and profit for the handset and semiconductor industries. That weakness in the market will extend into 2007, Templeton said, leading TI to cut costs, including 500 jobs, which represent about 1.6 percent of its global workforce of 31,000.
TI’s news reflects results already reported by some handset vendors. Motorola said last week that it would cut 3,500 jobs, or about five percent of its workforce, to address costs. Analysts said that job cuts reflected expectations that the handset market would likely remain somewhat stagnant for an extended period. Albert Lin of American Technology Research said last week that the global slowdown may last until the end of this year or early next year, when mobile TV, location-based services and network upgrades spark another handset replacement cycle.