By Benjamin Pimentel
Texas Instruments Inc. (TXN) is expected to report a 17% drop in
third-quarter sales on Monday, but analysts also see the chip giant
affirming the rising optimism in the semiconductor industry.
TI is scheduled to report third-quarter financials on
Monday.
"As one of the key global semiconductor suppliers, we believe
Texas Instruments will benefit from the continuing rebound in the
semiconductor market over the next few quarters and through 2010,"
Brigantine Advisors analyst Ramesh Misra said in an Oct. 5
note.
Analysts currently expect the Dallas-based chip giant to report
earnings of 39 cents a share on revenue of $2.8 billion, according
to a consensus survey by FactSet Research.
That represents a slight decline from the year-earlier period
when the chip maker reported earnings of 43 cents a share on
revenue of $3.4 billion.
In early September, the company boosted hopes of improving chip
demand after it raised its sales and earnings outlooks.
TI said it expects revenue to be in the range of $2.73 billion
to $2.87 billion, and earnings in the range of 37 cents a share to
41 cents a share. The company also said it expects its analog
business to be biggest driver of sequential growth.
TI is still widely considered a dominant tech giant, but it is
also a company struggling with a changing competitive
landscape.
The company is wrestling with the threat to its dominant
position in the cell-phone chip market as some top customers have
shifted to a multi-supplier strategy. Nokia Corp. (NOK) has decided
to work with other suppliers such as Broadcom Corp. (BRCM) and
STMicroelectronics NV (STM).
With heightened competition in the wireless arena, TI has
focused more on its strengths in analog and embedded
processing.
The company's analog chips, which perform such functions as
translating sound and temperature into signals that computers can
process, are used for such products as home security systems,
automobile air bags and blood pressure monitors.
Broadpoint AmTech analyst Doug Freedman cited TI's "analog
strength" in a note after the company's outlook revisions.
"We are adding a bit more volatility to seasonality going
forward, and believe there is good news being left for the December
quarter," Freedman wrote. "Consequently, we model the fourth
quarter to be stronger than seasonal, and expect seasonal patterns
to return in March."
But Misra of Brigantine Advisors said the company could likely
face near term headwinds, saying in a note, "While the company's
planned exit from the handset baseband business is well understood
and factored in by investors, the impact TI's other businesses will
likely suffer due to this is not adequately appreciated."
Misra added: "TI will not be able to provide bundled solutions
to the handset market, and without a baseband offering, will likely
be treated as just another analog IC supplier by potential
customers."
-Benjamin Pimentel; 415-439-6400; AskNewswires@dowjones.com