Texas Instruments Inc. (TXN:US), the largest maker of analog chips, predicted first-quarter sales that fell short of some analysts’ estimates as electronic-device makers postpone orders to keep inventory low amid lackluster demand.
First-quarter sales will be $2.69 billion to $2.91 billion, the Dallas-based company said yesterday in a statement. Analysts on average had predicted $2.89 billion, according to data (TXN:US) compiled by Bloomberg.
Texas Instruments’ customers, from home-appliance makers to military-hardware manufacturers, are holding off on buying to avoid stockpiles of unused parts amid uncertain demand. The company (TXN:US) needs a broad economic recovery before its sales and earnings improve, according to Vernon Essi, an analyst at Needham & Co.
“You need a lift across a lot of areas to move the needle at TI,” Essi said. “I don’t think there’s enough strength.”
Texas Instruments fell as much as 2.1 percent after the results. The shares declined less than 1 percent to $33.46 at yesterday’s close in New York, leaving them up 8.3 percent this year.
Fourth-quarter net income (TXN:US) was $264 million, or 23 cents a share, compared with $298 million, or 25 cents, a year earlier. Sales fell 13 percent to $2.98 billion. Analysts on average had predicted revenue of $2.95 billion.
“We continue to operate in a weak demand environment,” Richard Templeton, Texas Instruments’ chief executive officer, said in the statement. “Our visibility into future demand remains limited as our lead times are short and our customers are reluctant to commit to extended backlog.”
Customers are asking Texas Instruments for orders at short notice and keeping their parts stockpiles at low levels, Chief Financial Officer Kevin March said in a telephone interview.
“Even the slightest uptick in their end-demand and they are going to be caught short,” March said. “Everybody’s going to have to replenish.”
On Nov. 14, the company said it was cutting 1,700 jobs to reduce expenses by about $450 million a year, part of Templeton’s planned shift away from digital chips that run mobile phones and tablets. The measures were expected to result in costs of $325 million, mostly in the fourth quarter, Texas Instruments said at the time.
The exit from the phone-processor business will knock about $135 million off first-quarter sales, or 75 percent of the total decline from the fourth quarter, at the midpoint of the company’s forecast.
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