Recently, Texas Instruments (
) or "TI" narrowed its revenue and earnings expectations for the
fourth quarter of 2012.
The chipmaker now expects sales of $2.89-$3.01 billion versus
its previous guidance of $2.83-$3.07 billion. The earnings
outlook has also been trimmed to 5-9 cents from the previous
guidance of 23-31 cents.
The current earnings guidance includes 21 cents of charges
associated with previously announced restructuring in the
company's Wireless segment.
Recently, TI announced its restructuring program wherein the
company plans to cut 1,700 jobs worldwide in order to reduce
operational costs, shut down its wireless chip operations, and
concentrate on embedded solutions like automobiles, industrial
and other non-consumer markets, which have a longer life cycle.
The company expects to incur total charges of approximately $325
million in the fourth quarter.
It is encouraging that despite the weak macro environment, the
company has not lowered the midpoint of the revenue guidance.
With game consoles and e-books doing well for TI, the company
cited weakness in wireless infrastructure and industrial
In order to retain its position in the world, it is imperative
that TI continues to undertake various initiatives and develop
new products, keeping in mind the interest of the organization in
both the long and short run. We believe the restructuring action
will bring in stability and steady earnings growth in the near
Texas Instruments is one of the largest suppliers of analog
and digital signal processing (DSP) integrated circuits. In the
third quarter, TI posted decent numbers, with both revenue and
earnings surpassing our expectations. The company's compelling
product line-up, increasing differentiation in its business,
restructuring activities and lower-cost 300mm capacity should
drive earnings in the longer term.
Currently, Texas Instruments has a Zacks #3 Rank (Hold). We
note that its rivals,
Maxim Integrated Products, Inc
Analog Devices, Inc
) also carry a Zacks #3 Rank (Hold).
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