Texas Instruments Inc. (TXN:US), the largest maker of analog chips, forecast fourth-quarter profit that fell short of most analysts’ estimates, as chip resellers cut inventory on concern that economic growth will remain weak.
Net income will be 23 cents to 31 cents a share on revenue of $2.83 billion to $3.07 billion, the Dallas-based company said yesterday in a statement. The forecast includes a 6-cent restructuring and acquisition charge. Analysts on average had predicted earnings of 37 cents on sales of $3.22 billion in the current period, according to data compiled by Bloomberg.
Texas Instruments has thousands of customers ranging from home-appliance providers to manufacturers of space hardware, making its earnings an indicator of economic demand. Concern that global growth will remain sluggish has led distributors to reduce orders to bring down inventory levels.
“The fourth quarter is going to be a tough quarter, like last year,” said Tore Svanberg, an analyst at Stifel Nicolaus & Co. “Customers are basically delaying and waiting.”
Texas Instruments shares (TXN:US) fell to $27.71 in extended trading following the announcement. They had declined less than 1 percent to $27.79 at yesterday’s close in New York, leaving the stock down 4.5 percent this year.
Orders slowed throughout the quarter and customers are giving the company very little indication as to when they might increase purchases, according to Chief Financial Officer Kevin March. He said that was the case across most of the chipmaker’s business lines.
“We’ve got a lot of cautious customers out there,” March said in an interview. “They’re quite uncertain as to their end- demand.”
Third-quarter sales fell 2.2 percent to $3.39 billion. Analysts had predicted revenue of $3.3 billion.
Net income was $784 million, or 67 cents a share, compared with $601 million, or 51 cents, in the same period a year earlier, Texas Instruments said. The results in the recent quarter included a 7-cent charge related to the acquisition of National Semiconductor Corp. last year, as well as a 22-cent benefit from changes in the company’s Japanese pension plan and taxes.
Texas Instruments is the latest chipmaker to report earnings that aren’t getting the usual boost from increasing demand during the end-of-year holiday shopping season. Last week, Intel Corp. (INTC:US) and Advanced Micro Devices Inc. (AMD:US) said demand for personal computers has fallen below typical seasonal patterns.
The company, which predicted a 9.4 percent to 16.5 percent decline in fourth quarter revenue from the previous period, typically sees sales fall 4 percent in the the last three months of the year from the preceding period, March said.
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