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| Monday, October 23, 2006 |
Texas Instruments Inc., which makes chips for mobile phones, said Monday that profit rose slightly in the third quarter, but it warned that orders declined and fourth-quarter semiconductor growth will be below the seasonal average.
Texas Instruments said it earned $702 million, or 46 cents per share, in the July-September period compared to $631 million, or 38 cents per share, a year earlier.
Profit from continuing operations were 45 cents per share.
Analysts had expected TI to earn 45 cents per share, according to a survey by Thomson Financial. Last month, TI predicted operating profit would be 44 to 46 cents per share.
Revenue rose 13 percent to $3.76 billion from $3.34 billion a year ago, slightly below analysts' forecast of $3.80 billion.
The company expects fourth-quarter earnings of 40 to 46 cents per share on sales of $3.46 billion to $3.75 billion. Analysts were expecting profit of 45 cents per share on higher revenue -- $3.81 billion.
Chief Executive Richard Templeton said the third quarter was one of the best in the company's history, but he also warned about a 12 percent decline in orders.
Templeton said TI believes that customers -- manufacturers that use TI chips in their products -- have built up their inventories and are running leaner, and that the wireless market will tilt toward low-priced cell phones.
The shift toward lower-end phones means a decline in the average value of the TI components in handsets, said Ron Slaymaker, TI's vice president of investor relations.
"We don't hear our customers talk about any broad turndown in consumption, it's just the mix in wireless," Slaymaker said.
Slaymaker said the company believes the order decline "is near term." But the slowdown is occurring in the traditionally strong fourth quarter, and the first quarter is usually weaker.
To deal with the slowdown in orders, TI has slowed new hiring and reduced travel and other discretionary spending, Slaymaker said.
In trading before financial results were announced, TI shares rose 51 cents or 1.6 percent, to $31.88 on the New York Stock Exchange. In after-hours trading, the shares were down 58 cents or 1.8 percent, to $31.30. |
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