Texas Instruments pulled down its profit forecast for the December quarter by as much as two-thirds on Monday, and it also cut its revenue expectations, saying the economic downturn is having a powerful impact on the market for its chips.
The company, a major provider of processors for mobile phones and other devices, said it now expects to report earnings of between US$0.10 per share and $0.16 for the current quarter, which ends Dec. 31. TI previously had forecast earnings of $0.30 to $0.36 for the quarter, when it reported its third-quarter results on Oct. 20.
Revenue is likely to be in the range of $2.30 billion to $2.50 billion, down from the previous prediction of $2.83 billion to $3.07 billion, TI said.
"This is a very broad-based decline," said Ron Slaymaker, vice president and manager of investor relations, on a conference call following Monday's announcement. "All major product lines are down. All major product lines are down more than we had expected in October."
The current woes are different from those the industry experienced around 2001. Those were caused mostly by excess inventory, Slaymaker said. Paring down the inventories of TI and its customers will help but not solve the problem, he said. "It is a demand-driven downturn," Slaymaker said.
The announcement took place after the close of the New York Stock Exchange, where TI's shares (TXN) are traded. The stock was down $0.57 at $14.25 in after-hours trading late Monday, after rising $0.26 during the normal trading day.