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TI to shed cellular baseband business: Chip maker to refocus on processors for smartphones

Texas Instruments Inc. reported weak revenue and profit in the third quarter on a slowdown in orders – as it forecasted last quarter, the company said – and said it would sell off part of its wireless business.
TI’s stock sank more than 5% in after-hours trading to $17.98.
The company earned nearly $3.4 billion in revenue in the third quarter, down 8% from the year-ago quarter, and income reached $563 million, down 26%. Revenue and earnings per share were lower than Wall Street’s expectations. Wireless revenue, specifically, was down 16%.
CEO Rich Templeton said that individuals and corporations that buy TI products reduced spending in the face of an uncertain economy.
The company sees further drops in revenue for the fourth quarter, according to Templeton. In response, TI will reduce inventory, expenses and capital spending, he said.
One area ripe for cutting: $200 million, or about one-third, of its wireless-related expenses, through the sale of its merchant baseband business. The reduction in expenses should be completed by June. A spokeswoman said that the company would know the outcome of its intent to sell the merchant baseband business within the “next few months.”
“If a sale does not occur, we will continue to support existing customer engagements and will take additional action to remove almost all of the operating expense associated with this revenue,” said spokeswoman Tracy Wright in an e-mail.
Templeton said TI would remain focused on wireless application processors for smartphones, which have the best growth rate of any device segment. Overall, the company planned to invest more in its analog and embedded processing businesses, as they have shown 9% growth over the year-ago quarter, the CEO said.


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