Texas Instruments Posts 27 Percent Year-Over-Year Decrease in Q3 Earnings

Following news of projected losses among electronics makers and retailers, Dallas-based company that that makes chips for cell phones and other devices is reporting a 27 percent year-over-year net earnings decrease in the third quarter.

 

Officials at Texas Instruments (News - Alert) say net earnings of $563 million, or 43 cents per share, are down 27 percent from $776 million, or 54 cents per share, from the year-ago quarter.

 

The company reportedly will cut its work force by 650 people in six nations from its unit that makes cell phone chips. That’s part of a larger plan to reduce expenses in its wireless business by about one-third, or more than $200 million annualized.

 

TI Chairman, President and Chief Executive Officer Rich Templeton said he entered the third quarter with a “cautious view of the economy.”

 

“Revenue was weak, as expected, because consumers and corporations reduced their spending in this uncertain economy,” Templeton said.

 

Templeton said that despite recessionary conditions, TI’s revenue from its analog business was steady, and that its embedded processing business grew 9 percent year-over-year.

 

“Although not immune to near-term economic pressures, these are two of the best long-term opportunities in our industry,” Templeton said. “We are a leader in each and expect to strengthen our position even in this period of economic weakness.”

 

Here’s how the company’s revenue broke down by market segment:

 

Templeton reportedly told analysts on a conference call that through final three weeks of September – normally a time of budding demand for the holiday season – TI was seeing less demand.

 

“That has held through the first 20 days of October,” he said.

 

The company reportedly expects sales of up to $3.07 billion in the fourth quarter – a figure that’s far below analysts’ call for $3.3 billion. Last year’s four-quarter sales were $3.56 billion.

 

The company also reportedly is expecting 30 cents to 36 cents per share in fourth-quarter earnings, compared to the 44 cents per share that analysts were expecting.

 

In anticipation of declining fourth-quarter demand, Templeton said, the company reduced its inventory – a move that brought down factory use, in turn, and put more pressure on profitability.

 

“We also worked closely with our distributors to reduce the inventory in our channels,” Templeton said. “We will accelerate our inventory reduction in the fourth quarter. We also will continue to reduce expenses and capital spending. At the same time, we will continue to invest in opportunities to strengthen our positions in analog and embedded processing.”