Texas Instruments Inc (TXN)

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Texas Instruments expected to report profit gain
But analysts worry that chip giant is starting to feel pain of slowdown
By Benjamin Pimentel, MarketWatch
Last update: 11:47 a.m. EDT April 18, 2008


SAN FRANCISCO (MarketWatch) - Texas Instruments Inc. will report first-quarter earnings on Monday amid Wall Street concerns that the chip giant is starting to feel the pain of a slowing economy.
Analysts expect TI 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 & Company 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. decided to work with other suppliers such as Broadcom Corp. 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.

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." End of Story

Benjamin Pimentel is a MarketWatch reporter based in San Francisco.

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