Job cuts on the cards as TI misses expectations
Published: 22 Oct 2002 09:39 BST
Texas Instruments, the largest maker of chips used in mobile phones, posted earnings Monday that fell short of estimates and announced plans to cut 500 jobs.
For the three months ended 30 September, TI said it earned $188m, or 11 cents per share, on revenue of $2.25bn. In the same quarter a year ago, the company had a net loss of $117m, or 7 cents per share, on revenue of $1.85bn.
Excluding various items, TI posted a narrower net income of 9 cents per share. Analysts had been expecting earnings on that basis of 10 cents a share, according to First Call.
TI said it expects total sales to drop 10 percent in the current quarter compared with the just-reported quarter, with earnings after various charges to be about breakeven. Earnings excluding various items should be about 2 cents per share, the company said.
TI blamed the weaker sales on a drop in semiconductor demand as well as a seasonal decline in demand in its calculator business.
"Except for wireless, orders were generally weaker in the third quarter compared with the second quarter, leading TI to expect revenue to decline sequentially in the fourth quarter," chief executive Tom Engibous said in a statement. "Given the limited visibility in the current environment, we believe it is prudent to plan cautiously yet retain the flexibility to respond quickly should customer demand increase. TI is aggressively tightening its control of expenses and aligning resources with market demand, including the reduction of about 500 jobs."
Prudential Securities analyst Hans Mosesmann said in a research note that TI's fourth-quarter guidance was "much worse than expected," noting that he had forecast sales would dip just 2 percent. Mosesmann said the company's earnings estimate of 2 cents a share, before charges, is below the consensus estimate of 11 cents per share and also below Mosesmann's own forecast of 8 cents per share.
Shares of TI plunged more than 16 percent in after-hours trading, changing hands recently at $14.29. Ahead of the earnings report, TI shares had ended regular trading at $17.12, up 2 cents, or less than 1 percent.
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