Texas Instruments Inc (TI) gave a lukewarm outlook for the current quarter, suggesting that back-to-school sales of computers and other consumer electronics would be weaker than normal.
The company, whose chips are found in many products ranging from cellphones to cars, said its computing and consumer electronics customers were ordering fewer chips than usual at this time of year because of US and European economic concerns.
However, it said that while manufacturers were holding off on making products ahead of the back-to-school sales period, there was still time for them to ramp up ahead of the year-end holiday shopping season.
“We’re seeing a somewhat more muted outlook from computer customers and consumer areas such as TV and gaming,” chief financial officer Kevin March said. “We’re not seeing the signals we’d normally see at this time of year.”
However, the executive said that if demand improves, TI would have its factories ready to take advantage of this. He also said the current economic uncertainty may not necessarily mean slow holiday sales.
“I don’t think we’re going to wind up with a Christmas without any gifts under the tree. The [store shelves] may just end up filling later,” he said.
Computing represents about 23 percent of TI’s revenue, while consumer products bring in roughly 10 percent, its investor relations executive Ron Slaymaker told analysts on a conference call.
TI is also seeing weak sales to US automotive clients who are having a hard time procuring all the parts they need because of shortages after the Japan earthquake and tsunami earlier this year, Slaymaker said.
He said it was not clear if any consumer demand weakness was also a factor in weak automotive chip sales.
TI forecast third-quarter revenue of US$3.4 billion to US$3.7 billion. This implies a midpoint of US$3.5 billion, which was below the average analyst expectation of US$3.6 billion, according to Thomson Reuters I/B/E/S.
It forecast earnings per share for the quarter of US$0.55 to US$0.65, a wider-than-usual guidance range for the company.
This compares with second-quarter earnings of US$672 million, or US$0.56 per share, and US$769 million, or US$0.62 per share, in the year-ago quarter.
Revenue fell to US$3.46 billion from almost US$3.5 billion, but was slightly ahead of analysts’ consensus forecast of US$3.44 billion, according to Thomson Reuters I/B/E/S.
TI had slashed its revenue outlook last month as Nokia, its biggest baseband customer, was losing out in the smartphone market.
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