TI sees PC, TV weakness for a few quarters

CIOL Bureau
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NEW YORK, USA: Chip maker Texas Instruments Inc, which posted a third-quarter profit of $859 million on Monday, warned its fourth-quarter revenue will be hurt by slowing demand for chips for computers and televisions, sending its shares lower even though its results beat Wall Street forecasts.


The maker of chips used in products from cars to cellphones said strong demand from industrial customers was offset by weak chip sales for consumer products.

And chief financial officer of TI, Kevin March, said consumer chip weakness would persist this quarter and growth in industrial chips will be less spectacular after a year of strong growth.

"With the relatively weak PC market and TV market, we saw that weakness develop in the third quarter and it will probably continue into the fourth quarter," March told Reuters.


"I wouldn't be surprised if we're looking at a couple of quarters of correction," March said.

He gave no specific guidance as to when the weakness would end. But based on past dips in these markets he said: "It shouldn't be that long before we see demand resume."

While TI's revenue forecast for the current quarter met Wall Street expectations, some investors still worried about whether it would be saddled with too much inventory in an uncertain economy.


With a cloudy outlook, "everybody wants to be pretty cautious about how much product they continue to build or what they build," Gleacher analyst Doug Freedman said.

TI had struggled many quarters to meet chip demand due to an industrywide component shortage, but now that overall chip supply has come closer to demand, some investors worry that orders have less room to grow.

However, March said TI's internal product inventory was still lighter than he would like, with 75 days worth of products in stock compared with TI's target of 80 days. He said that inventory among distributors was normal.