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TI's Net Rises 11% but Revenue Outlook Is Weak
By BENJAMIN PIMENTEL and BOB SECHLER
October 23, 2007; Page C6

Texas Instruments Inc., a large maker of cellphone chips, reported an 11% jump in third-quarter profit. But its shares slipped in extended-hours trading after the chip maker gave a disappointing revenue outlook.

Chief Financial Officer Kevin March said the company's fourth-quarter revenue from wireless chips likely will be flat with the third quarter, blaming an anticipated slowdown in orders for wireless chips toward the end of the quarter.

Still, he characterized the company's overall demand outlook as solid and said TI hasn't seen evidence of a slowdown in consumer spending. As for the anticipated wireless order slowdown, he said customers merely have been managing inventories of wireless components differently. He said TI noticed the trend in last year's fourth quarter.

The Dallas-based company said net income rose to $776 million, or 54 cents a share, from $702 million, or 46 cents a share, in the year-earlier period. Analysts surveyed by Thomson Financial had expected the company to post earnings per share of 50 cents on revenue of $3.66 billion.

Revenue fell 2.6% to $3.66 billion from $3.76 billion a year ago but was 7% higher than in the previous quarter. TI attributed the increase to stronger demand for its analog semiconductor products. TI also cited the back-to-school demand for graphing calculators.

Analysts say TI has been hurt by the decision of its biggest customer, Nokia Corp., to work with other suppliers, such as Broadcom Corp. and STMicroelectronics NV. Mr. Marsh also noted that Telefon A.B. L.M. Ericsson recently began using a second chip supplier on one of its 3G products, as previously announced.

"The trick [for TI] will be to increase its business with other customers like Motorola," said analyst Flint Pulskamp of International Data Corp., a research organization focused on the technology industry.

Analyst Crawford Del Prete of International Data Corp. said TI had a strong quarter. "It demonstrates that the company is getting better footprint in some high volume applications that have experienced very strong demand, such as storage peripherals," he said.

The company expects fourth-quarter revenue of between $3.40 billion and $3.68 billion, while analysts surveyed by Thomson Financial projected $3.72 billion. The company expects per-share profit of 48 cents to 54 cents, compared with Wall Street's average estimate of 50 cents for the quarter.

Shares of TI, which reported results after the close of regular trading, were off $1.37, or 4%, at $32.90 apiece in after-hours trading.

Write to Bob Sechler at [e-mail]