GO
Loading...

TI Projects Drop in Revenue as Chip Demand Slips

CNBC.com with Reuters
Monday, 22 Oct 2012 | 6:03 PM ET

Texas Instruments posted a decline in quarterly revenue as demand for its chips slipped on economic concerns and it forecast more weakness this quarter.

Getty Images

The maker of chips used in products ranging from consumer electronics to industrial equipment posted a profit of $784 million, or 67 cents per share, up from $601 million, or 51 cents per share, in the year-ago quarter.

Revenue declined to $3.39 billion from $3.47 billion in the year-ago quarter.

After the earnings release, the chip maker's shares fell in extended-hours trade. (Click here to get the latest quotes for Texas Instruments.)

"Across the board we're seeing customers being extremely cautious, very careful about the level of inventory that they hold so giving us very low levels of visibility as to what they'll want to order for the quarter," Texas Instruments Chief Financial Officer Kevin March said in an interview.

TXN Lower After Earnings
Insight on Texas Instruments following its earnings, with the Fast Money team. Meanwhile Tom DeMark, DeMark Indicators, offers insight on whether the S&P is delivering a sell signal.

The chipmaker's inability to fully utilize its fabrication plants has investors worried about its profitability.

"With the macroeconomic slowdown we're experiencing, and TI's excess capacity - they're only using about 75 percent of their capacity right now - they're going to be under some longer-term pressure to try to fill those fabs," said JoAnne Feeney, an analyst at Longbow Research.

For the fourth quarter, Texas Instruments said it expects earnings of 23 cents to 31 cents per share on revenue of $2.83 billion to $3.07 billion.

"It's definitely light. ... But I don't know how surprising that is given what we've seen in semiconductors and tech recently," said Stacy Rasgon, an analyst at Bernstein Research.


Featured

Contact Technology

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More
  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.