Monday, April 21, 2008 12:36:34 PM
... after the closing Bell. The Earnings CC is at 3:30 CDT and will be available here:
http://tinyurl.com/43x78a
>> Has the Downturn Hurt Texas Instruments?
Analysts forecast profit gain, but worry about weakening economy's impact
Benjamin Pimentel
MarketWatch (San Francisco)
April 21, 2008
http://tinyurl.com/3wqeqr
Texas Instruments Inc. is expected to report a profit gain when it reports earnings Monday.
But Wall Street is bracing for signs that the chip giant is starting to feel the pain of a slowing economy.
Analysts expect TI (TXN) to report earnings of 43 cents a share on revenue of $3.29 billion, according to a survey by FactSet Research. For the year-earlier period, the company reported earnings of 36 cents a share on revenue of $3.19 billion.
Last month, the Dallas-based company said it expects revenue between $3.21 billion and $3.35 billion, compared with its previous range of $3.27 billion to $3.55 billion. The company also dropped its midpoint target, to $3.28 billion from $3.41 billion.
In addition, the company trimmed its forecast for earnings per share to a range of 41 cents to 45 cents, compared with its previous prediction of 43 cents to 49 cents. The midpoint for its earnings per share target was cut to 43 cents from 46 cents.
Analyst Daniel Berenbaum of Caris & Co. described TI as "a quality stock" but one that is "not immune to macro concerns."
"We expect Texas Instruments to weather the ongoing economic storm better than most, but we continue to recommend that investors avoid putting new money to work here and in the semiconductor space in general," he said in a research note. "We see a weaker-than-expected mid-quarter update as evidence of end-market softness, and not Texas Instruments-specific issues."
TI's dominant position in the cell-phone chip market has faced new challenges after its biggest customer, Nokia Corp. (NOK) decided to work with other suppliers such as Broadcom Corp. (BRCM) and STMicroelectronics NV (STM) [also Infineon]. Another major customer, Ericsson LM (ERIC), also has shifted to a multisupplier strategy.
TI's stock took a hit Thursday after Nokia, the world's largest cell phone maker, reported a lower-than-expected increase in first-quarter profit. In late March, analyst Doug Freedman of American Technology Research downgraded TI to neutral saying the company "will likely lose wireless share at Nokia as competitors' designs ramp due to a shift from sole supplier relationships to multiple vendors." However, Berenbaum said that despite the negative news from Nokia, the cell phone giant will likely still outperform its rivals "which could help buoy TI near-term." Analyst John Dryden of Charter Equity Research also said he doesn't see TI's anticipated share loss in wireless to be as fast or deep as the consensus view. "On the contrary, competing solutions from a variety of silicon vendors will be slow to materialize at Nokia over the next couple of years." ###
- Eric -
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