Texas Instruments cuts 3,400 jobs: Chip maker girds for long-term recession

Texas Instruments, Inc. yesterday posted a 30% year-on-year drop in revenue and a 95% drop in operating profit. About one-quarter of T.I.’s revenue in the fourth quarter was derived from wireless work.
As a result, the company announced it would cut 12% of its work force and, with other cuts, realize $700 million in annual savings later this year.
Investors had expected an even greater drop in revenue and rewarded T.I.’s cost-cutting measures by sending its stock up more than 4% in midday trading today.
T.I. will realize the job cuts through 1,800 layoffs and 1,600 voluntary retirements, the company said.
“We are not counting on a near-term economic rebound for improvement,” said Rich Templeton, CEO of the company. “The actions we are taking to reduce expenses and inventory will position T.I. to deliver solid financial results, even in a period of prolonged economic weakness.”
T.I. reported $107 million in net income for the fourth quarter, down from $756 million in the year-ago quarter.
For all of 2008, revenue reached $12.5 billion, down 10% from the prior year. Income reached $1.9 billion, down 27% from the prior year. According to the company, the decline in sales was due to weak demand for its wireless products.
Nokia Corp., the world’s largest handset maker and creator of demand for wireless chips, said last week that handset sales this year would decline 10% from last year. Other analysts have pegged the slowdown as greater than 10%.
In related news, T.I. said it had not found a buyer for its merchant 2G and 2.5G baseband business and would continue to support its existing customers.