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TI reduces quarterly guideline
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Thursday, June 9, 2011
Texas Instruments Inc. Wednesday (June 8) lowered its target range for second quarter sales and earnings, citing lower demand from wireless handset maker Nokia Inc.
TI (Dallas) said it now expects sales for the quarter to be between $3.36 billion and $3.5 billion, down from a previously guided range of between $3.41 billion and $3.69 billion. Earnings in accordance with generally accepted accounting principles (GAAP) are expected to be 51 to 55 cents per share, down from a prior guided ranges of 52 to 60 cents per share, TI said.
Ron Slaymaker, TI vice president and head of investor relations, said the shortfall is entirely attributed to lower-than-expected demand from Nokia, which itself said late last month that it expects sales to be substantially below its previously guided range.
TI, which previously attempted to sell its cellular baseband business, supplies basebands and other chips for Nokia's handsets. TI has been winding down its baseband operations and expects to completely stop generating revenue from baseband chips after next year.
"We are in an end-of- life process with this customer [Nokia] on the product," Slaymaker said. "This is more a customer performance in the market issue. This is not a competitor coming in to displace TI in these handsets."
Slaymaker said that the shortfall from Nokia orders is mostly associated with baseband chips, but also involves devices that support connectivity, OMAP processors and even analog chips to some degree. "The adjustments we are seeing from them really reflect broadly lower demand across the various products that we sell to that customer," Slaymaker said.
But Slaymaker stressed that baseband chips¡ªwhich account for most of the devices TI sells to Nokia¡ª accounted for the "strong majority" of the shortfall.
Slaymaker said the silver lining in the guidance adjustment was that it is associated mostly with a product¡ªbasebands¡ªthat TI is winding down.
"Baseband is rapidly falling as a percentage of TI's revenue," Slaymaker said. "As baseband declines, our customer base continues to diversity and becomes better balanced. In fact, for our non-baseband products, no single end customer will make up more than 5 percent of our revenue in the first half of this year."
Also Wednesday, Slaymaker reiterated that TI restarted full production at its quake-damaged fab in Aizu-Wakamatsu, Japan, in April and said its secondly quartlerly results would be only slightly affected by any manufacturing capacity shortfall associated with that fab being off line. TI's more heavily damaged fab in Miho, about 40 miles northwest of Tokyo, is expected to remain off line until next month. But Slaymaker said 80 percent of the products made at the Miho fab are now being sourced from other TI fabs.
By: DocMemory
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