The Wall Street Journal-20080123-Texas Instruments- Profit Bolstered by Chip Demand
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Texas Instruments' Profit Bolstered by Chip Demand
Chip maker Texas Instruments Inc. reported a 13% jump in the fourth quarter, bolstered by strong demand for its digital and analog chips, and said it is not yet seeing the signs of an economic slowdown or weakening consumer spending.
"Near-term demand trends continue to be good," said Chief Financial Officer Kevin March. "Of course, we're very aware of the headlines . . . but our customers are not signaling to us we should be very concerned."
For the current quarter, TI said it expects revenue in the range of $3.27 billion to $3.55 billion, and earnings per share in the range of 43 cents to 49 cents. Analysts surveyed by Thomson Financial currently anticipate TI reporting earnings of 45 cents per share on revenue of $3.41 billion.
TI's dominant position in the cellphone chip market has faced new challenges after its biggest customer, Nokia Corp., decided to work with other suppliers such as Broadcom Corp. and STMicroelectronics NV. Another major customer, Telefon AB L.M. Ericsson, also has shifted to a multisupplier strategy.
Analyst Flint Pulskamp of International Data Corp. said that TI has to find ways to offset expected losses in its wireless-chip business. "With the changing environment and the loss of business, are they able to pick up new business fast enough to close that gap? That is the big question."
TI also is facing stiffer competition in the market for applications processors, cellphone chips used to process video, audio and other features. Mr. Pulskamp said that the company is vying for clients with Qualcomm Inc. and Nvidia Corp.
TI is focusing on its analog business, where the demand for customized products and margins are greater.
