TI lowers outlook for the first quarter: Weak demand for 3G chips cited

Texas Instruments Inc. lowered its revenue range and earnings per share for the quarter ending March 31.
The company is set to hold a conference call later today to discuss the change in outlook.
TI said its expected revenue at quarter’s end will be in the range of $3.21 billion to $3.35 billion, down from prior guidance of $3.27 billion to $3.55 billion. Earnings per share are expected in the 41 cents to 45 cents range, down from prior guidance of 43 cents to 49 cents.
TI’s stock was down in response, dropping as much as 5.6% to hover around $28 per share, the low end of its 52-week range.
According to analyst Mark McKechnie at American Technology Research, TI has cited weaker demand than anticipated in 3G chips. McKechnie said the likely cause was a pullback in orders from Nokia Corp. in Europe, which surprised the analyst due to bullish outlooks from Nokia itself.
However, the analyst said, conversations with Nokia after TI’s new guidance pointed to the handset vendor building channel inventory to ensure proper supply of its new handsets — rather than a slackening in demand. Demand in emerging markets, according to TI’s outlook, remains strong.
“We still view handsets, and Nokia specifically, as more resilient than most (vendors) to global macro conditions, but not entirely immune,” McKechnie wrote in a note to investors today. “Our new estimates, especially margins, seem achievable given the strength of Nokia’s new product ramp.”