TI's past relationship with NOK is now showing the effect.
Even the big guys make mistakes.
TI expected to report 3% revenue rise
By Benjamin Pimentel, MarketWatch
Last update: 1:48 p.m. EST Jan. 17, 2008Print E-mail RSS Disable Live Quotes
SAN FRANCISCO (MarketWatch) -- Wall Street will get more color on the state of the chip industry and the broader tech market when Texas Instruments Inc. reports fourth-quarter earnings next week.
Texas Instruments Inc. (TXN:Texas Instruments Incorporated
News, chart, profile, more
Last: 29.43-0.07-0.24%
1:55pm 01/17/2008
Delayed quote dataAdd to portfolio
Analyst
Create alertInsider
Discuss
Financials
Sponsored by:
TXN 29.43, -0.07, -0.2%) , the world's No. 1 vendor of cell-phone chips, will report fourth-quarter results on Tuesday.
The company has gotten a boost from the growing demand for cell phones worldwide, although some analysts say TI has been hurt by the decision of two of its biggest customers to shift to other suppliers, and concerns over weaker consumer spending in North America could also affect its results.
TI's stock has fallen about 12% since Dec. 31.
Based on a Thomson Financial survey, analysts expect TI to report earnings of 52 cents per share on revenue of $3.58 billion, compared with earnings of 45 cents per share on revenue of $3.46 billion for the year ago quarter.
In December, the company had raised the midpoint of its expected earnings to 50 cents to 54 cents per share on revenue of between $3.5 billion and $3.66 billion. Previously, the Dallas-based company had forecast earnings of 48 cents to 54 cents a share and revenue between $3.4 billion and $3.68 billion.
TI's revision triggered the company's stock to rise and also calmed concerns that TI will take a hit after its biggest customer, Nokia Corp. (NOK:Nokia Corp
News, chart, profile, more
Last: 33.45-0.68-1.99%
1:55pm 01/17/2008
Delayed quote dataAdd to portfolio
Analyst
Create alertInsider
Discuss
Financials
Sponsored by:
NOK 33.45, -0.68, -2.0%) decided to work with other suppliers, such as Broadcom Corp. (BRCM:broadcom corp cl a
News, chart, profile, more
Last: 23.23+0.45+1.98%
2:00pm 01/17/2008
Delayed quote dataAdd to portfolio
Analyst
Create alertInsider
Discuss
Financials
Sponsored by:
BRCM 23.23, +0.45, +2.0%) and STMicroelectronics NV (STM:STMicroelectronics N V
News, chart, profile, more
Last: 12.31+0.11+0.90%
1:54pm 01/17/2008
Delayed quote dataAdd to portfolio
Analyst
Create alertInsider
Discuss
Financials
Sponsored by:
STM 12.31, +0.11, +0.9%) . Another major customer Ericsson LM (ERIC:ericsson l m tel co adr b sek 10
News, chart, profile, more
Last: 24.12+0.56+2.38%
2:00pm 01/17/2008
Delayed quote dataAdd to portfolio
Analyst
Create alertInsider
Discuss
Financials
Sponsored by:
ERIC 24.12, +0.56, +2.4%) also shifted to a multi-supplier strategy last year.
Analyst Tore Svanberg of Thomas Weisel Partners said he expects TI to do even better than consensus projections. He said he expects the company to meet his own higher revenue estimate of $3.59 billion and earnings of 53 cents per share.
However, he also noted that TI's outlook for the first quarter "has deteriorated in certain of the companies business segments," including wireless handset. TI's high-performance analog business, which, he said, tends to be up quarter to quarter, could be "more flattish" in the first quarter.
Analyst Flint Pulskamp of International Data Corp. said TI is also facing stiffer competition in the market for applications processors, cell phone chips used to process video, audio and other sophisticated features.
"It is becoming a more competitive environment," he said, citing emerging players in that space, such as Qualcomm Inc. (QCOM:QUALCOMM Incorporated
News, chart, profile, more
Last: 39.51-0.45-1.13%
2:00pm 01/17/2008
Delayed quote dataAdd to portfolio
Analyst
Create alertInsider
Discuss
Financials
Sponsored by:
QCOM 39.51, -0.45, -1.1%) and Nvidia Corp. (NVDA:nvidia corp com
News, chart, profile, more
Last: 23.98+0.27+1.14%
2:00pm 01/17/2008
Delayed quote dataAdd to portfolio
Analyst
Create alertInsider
Discuss
Financials
Sponsored by:
NVDA 23.98, +0.27, +1.1%) .
Analyst John Dryden of Charter Equity Research said he believes TI's analog business will boost the company's semiconductor revenue to grow 1.8% sequentially. Analog chips are used in such devices as cell phones and washing machines to translate sound and temperature into digital signals that can be understood by computers.
Dryden also said he did not believe TI's share loss in the wireless market "will be as fast or deep as consensus expects."
"We believe excellent operational performance, an increased mix of high-performance analog sales, reduced working capital and a large stock repurchase program will allow the stock to outperform the market near-term," he said in a research note.
In October, TI reported an 11% jump in third-quarter profit, but a 3% decline in revenue from the same period last year. The company also reported third-quarter income of $776 million on revenue of $3.66 billion, compared with year-earlier profit of $702 million on revenue of $3.8 billion.
TI remains the No. 1 cell phone chips vendor in the world, with 21.8% share of total revenue in 2006, according to the most recent date from IDC. Qualcomm was second with 19.2%, and Freescale was third with 8.9%.
Benjamin Pimentel is a MarketWatch reporter based in San Francisco. |
