Texas Instruments Inc. (TXN:US), the largest maker of analog chips, gave an updated fourth-quarter sales forecast that was in line with analysts’ estimates as customers seek to keep inventory low amid lackluster demand.
Sales will be $2.89 billion to $3.01 billion, the Dallas- based company said yesterday in a statement. Analysts on average projected revenue of $2.95 billion, according to data (TXN:US) compiled by Bloomberg. In October, Texas Instruments had said sales would be $2.83 billion to $3.07 billion.
Texas Instruments is one of the few technology companies that still issue quarterly updates. The breadth of its customer list -- ranging from home-appliance makers to manufacturers of space hardware -- makes its forecasts an indicator of demand across industries. As they wait to see whether economic conditions improve, many companies are keeping minimal stockpiles of unused parts, said Tore Svanberg, an analyst at Stifel Nicolaus & Co.
“The supply chain wants to run inventories as lean as possible before the end of the year,” he said. By market, “automotive is relatively better, consumer is relatively worse and communications is somewhere in between.”
Texas Instruments shares (TXN:US) climbed 4 percent to $31.01 at the close in New York, leaving them up 6.5 percent this year.
Low inventory levels “reflect economic uncertainty and relatively weak demand,” Texas Instruments Vice President Ron Slaymaker said on a conference call with analysts. “In general we’re shipping consistent with demand, and inventory levels are low.”
Any increases in demand will force customers to boost buying to replenish their stockpiles, Slaymaker said.
The computing, communications and industrial markets continue to be weak, he said. Consumer markets are mixed, with television makers cutting back on orders, while game consoles and e-book readers are seeing higher demand, Slaymaker said.
Earnings this quarter will be 5 cents to 9 cents a share, including a charge of 21 cents related to a restructuring of the wireless business, Texas Instruments said yesterday. That’s down from an earlier company forecast of 23 cents to 31 cents a share. Analysts had predicted a profit of 6 cents a share, according to data compiled by Bloomberg. In the fourth quarter of 2011, earnings were $298 million, or 25 cents a share, on sales of $3.42 billion.
On Nov. 14, the company said it will cut 1,700 jobs to reduce expenses by about $450 million a year, part of Chief Executive Officer Richard Templeton’s planned shift away from digital chips that run mobile phones and tablets. The measures will result in costs of $325 million, mostly in the current quarter, Texas Instruments said at the time.
Samsung Electronics Co. and Apple Inc., which together control about half of the market for smartphones, are increasingly developing their own chips, narrowing the opportunity in that business for chipmakers, Texas Instruments said last month.
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