Texas Instruments CFO reaffirms Q2 guidance
LONDON, May 29 (Reuters) - Texas Instruments Inc <TXN.N>,
the world's largest maker of chips for cellphones, on Wednesday
reaffirmed its guidance for sales and earnings in the second
quarter, driven mainly by demand for consumer electronics.
"The second quarter is progressing consistent with the
outlook and expectations we have previously expressed," Bill
Aylesworth, chief financial officer for the Dallas-based company
told an investors conference organised by Prudential Bache.
The company has said it expects revenues in the second
quarter to rise by 10 percent to around $2.0 billion versus the
first quarter. It sees six cents profit per share in the second
quarter, or five cents net per share if U.S. generally accepted
accounting principles (GAAP) are used. This compares with one
cent in the first quarter.
Analysts from Prudential Bache have described the 10 percent
sequential revenue growth target as "quite bullish."
Aylesworth said most its key customers were now buying to
meet end-demand and no longer building or depleting inventories.
"In most market spaces our customers have reached their
target inventory levels and are buying consistent with
consumption," he said, adding notebook computers and various
digital consumer electronics such as DVD players "continue to be
strong, based on true end-demand."
The story is slightly different for its wireless customers,
such as the world's largest mobile handset maker Nokia
<NOK1V.HE> from Finland, which has started to build up
inventories to meet anticipated demand in the Christmas quarter.
"With our wireless customers having reached their target
inventory levels, our shipments have been accelerating in line
with the typical seasonal demand pattern," Aylesworth said.
"We certainly expect growth (in sales to mobile customers)
to be consistent with the overal sequential growth," he added.
So far this year, the mobile phone sector is actually
declining with Gartner Dataquest reporting a 4 percent first
quarter drop in global sales to consumers of 93.8 million
handsets.
FIXED TELECOMS WEAK
The weakest sectors at Texas Instruments were for components
supplied to fixed telecoms and Internet infrastructure equipment
vendors which are still in the process of depleting old
inventories, Aylesworth said.
The situation was less gloomy in sales to manufacturers of
wireless base stations and broadband modem makers. These
companies are also buying less from TI because they are still
using old inventories, but they are expected to be at target
inventory levels some time in the second half of the year.
Aylesworth said he was optimistic about demand for
cellphones, and particularly the more advanced models that are
ready for 2.5 generation and third generation wireless
commmunications, designed for fast data services.
By the fourth quarter TI expects half of its wireless
revenues to come from 2.5 generation chips, compared with 25
percent now.
Although he quoted research projections that third
generation handsets will not become mainstream products before
2004, he said TI expects demand for semiconductors for third
generation wireless networks should become significant in 2003.
The company remained interested in acquisitions for digital
signal processor (DSP) application software and other DSP
intellectual property. It's also looking at analogue products
that complement its portfolio.
((Lucas van Grinsven, European Equities Desk, +44 20 7542 8825,
lucas.grinsven@reuters.com))
REUTERS
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