Texas Instruments (TI) said its third-quarter earnings and revenue would be worse than already low expectations because concern about an economic slowdown is stifling demand for products that use its chips.
The company, which warned in July of a modest quarter, said on Thursday that demand had weakened further across “a wide range of products, markets and customers.”
“Macroeconomic weakness is resulting in lower demand from consumers and enterprises,” TI’s head of investor relations Ron Slaymaker told analysts on a conference call.
He ruled out inventory adjustments as the reason for slowing demand.
Slaymaker noted that the firm is cutting expenses, including such as variable compensation to stop profits from falling as quickly as sales. However, because the shortfall is economy related, the executive said he had no way of knowing when demand would improve.
“The only solace to take away from this is that it’s not TI specific,” said Williams Financial analyst Cody Acree who cited warnings about weak demand across the semiconductor industry.
Investors also took the news in their stride because rivals such as Fairchild Semiconductor had already signaled a weak market by cutting its revenue guidance earlier this week.
Also on Thursday, another technology company, Corning Inc, cut its forecast for glass demand, citing sluggish television sales.
Acree said he was encouraged by Slaymaker’s mention on the call that TI’s applications chips for cellphones were selling well despite the overall weak demand and competition from rivals such as Qualcomm Inc and Nvidia Corp.
Texas Instruments, which makes chips for products ranging from cellphones to cars, now expects quarterly earnings per share of between US$0.56 and US$0.60, compared with its previous expectation of between US$0.55 and US$0.65.
The company forecast revenue of between US$3.23 billion and US$3.27 billion compared with its earlier target of US$3.4 billion to US$3.7 billion.
The new forecasts missed Wall Street expectations for earnings of US$0.59 per share on revenue of US$3.5 billion, Thomson Reuters I/B/E/S said.
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