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TI sees PC and TV weakness for few quarters
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By Sinead Carew
NEW YORK (Reuters) - Texas Instruments Inc warned its fourth-quarter revenue will be hurt by slowing demand for chips for computers and televisions, sending its shares lower even though its results beat Wall Street forecasts.
The...
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TI sees PC, TV weakness for few quarters
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By Sinead Carew
NEW YORK |
Tue Oct 26, 2010 5:23am EDT
NEW YORK (Reuters) - Texas Instruments Inc warned its fourth-quarter revenue will be hurt by slowing demand for chips for computers and televisions, sending its shares lower even though its results beat Wall Street forecasts.
The maker of chips used in products from cars to cellphones said strong demand from industrial customers was offset by weak chip sales for consumer products.
And Chief Financial Officer Kevin March said consumer chip weakness would persist this quarter and growth in industrial chips will be less spectacular after a year of strong growth.
"With the relatively weak PC market and TV market, we saw that weakness develop in the third quarter and it will probably continue into the fourth quarter," March told Reuters.
"I wouldn't be surprised if we're looking at a couple of quarters of correction," March said.
He gave no specific guidance as to when the weakness would end. But based on past dips in these markets he said: "It shouldn't be that long before we see demand resume."
While TI's revenue forecast for the current quarter met Wall Street expectations, some investors still worried about whether it would be saddled with too much inventory in an uncertain economy.
With a cloudy outlook, "everybody wants to be pretty cautious about how much product they continue to build or what they build," Gleacher analyst Doug Freedman said.
TI had struggled many quarters to meet chip demand due to an industrywide component shortage, but now that overall chip supply has come closer to demand, some investors worry that orders have less room to grow.
However, March said TI's internal product inventory was still lighter than he would like, with 75 days worth of products in stock compared with TI's target of 80 days. He said that inventory among distributors was normal.
REVENUE, EARNINGS BEAT
TI on Monday posted a third-quarter profit of $859 million, or 71 cents per share, up from $538 million, or 42 cents per share, in the year-ago quarter and ahead of Wall Street expectations for 69 cents per share.
Revenue rose about 30 percent to $3.74 billion, beating analyst expectations for $3.69 billion, according to Thomson Reuters I/B/E/S.
It said fourth-quarter revenue would range from $3.36 billion to $3.64 billion, implying a midpoint of $3.5 billion, in line with the average analyst expectation. It forecast current-quarter earnings per share of 59 cents to 67 cents, also in line with average expectations for 63 cents.
TI was not the only chip maker flagging current quarter weakness on Monday. Atheros Communications Inc, which makes wireless chips for laptops and phones, warned its sales could fall as much as 11 percent in the fourth quarter from the third quarter, worse than analysts expected.
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