Texas instruments says no change in guidance

Duncan Martell

SAN FRANCISCO: Texas Instruments Inc., the world's No. 1 maker of computer

chips for mobile phones, has not seen any significant change in demand or

improvement in visibility since it reported first-quarter results nearly two

weeks ago, president and chief executive, Thomas Engibous said on Monday.

"There is no change to our outlook," Engibous told analysts and

investors at a question-and-answer session following his presentation at the J P

Morgan H&Q Technology Conference here. Dallas-based Texas Instruments said

on April 17 that it expected second-quarter sales to decline about 20 per cent

from $2.53 billion in the previous quarter, resulting in an operating margin of

about break-even, excluding certain costs, charges and gains.

Texas Instruments competes with Intel Corp. and Analog Devices Inc. in the

market for digital signal processors, or DSP, chips that are widely used in cell

phones and other devices to help convert sound, temperature, light and other

analog signals into the digital language of computers.

Texas Instruments also said on April 17 that it would trim 2001 research and

development spending to $1.6 billion from $1.7 billion and capital expenditures

to $1.8 billion from an expected $2.0 billion. Engibous said that, among major

customers, inventories seemed to be clearing out at Nokia, the world's largest

handset maker, and that its orders are coming back to "normal." There

is still "inventory in the wireless channel," he added.

Also, Engibous said, because Texas Instrument's largest customer, Cisco

Systems Inc., orders chips directly from the company as well as through

distributors and contract manufacturers, it is difficult to ascertain how

exposed it is to the No. 1 data-networking company's planned write-off of $2.5

billion in inventory.

"We don't have a handle on what that $2.5 billion (in inventory)

is," he said. "Cisco is a very complex customer of ours."

Ultimately, Engibous said Texas Instruments' broadband operation - chips for

cable and DSL modems for high-speed connections to the Internet - will be its

second-largest vertical business behind its wireless business. "But we're

in the very early stages" of that industry, he said.

Texas Instruments also said when it reported first-quarter results that it

planned to cut 6 per cent of its work force amid flagging demand and growing

inventories.

(C) Reuters Limited 2001.