Texas Instruments Inc. (
or "TI" recently announced its plans to cut more than 500 jobs at
its French research and development plant in Villeneuve-Loubet
region, near Nice. The headcount reduction is scheduled to be
complete in the next few months.
The Villeneuve-Loubet facility makes microprocessors used in
smartphones and tablets. Of late, some of its prime customers
Apple Inc. (
started developing the chips internally, giving TI's business a
jolt. Eventually, the company planned to shift its focus to
industrial and automotive customers, which led to these 517 jobs
cuts. Currently, Texas Instruments employs 609 people in
Last month, the company announced that it plans to eliminate
1,700 jobs worldwide in order to reduce operational costs. This
layoff is an attempt by the company to optimize its cost
structure and cut spending in its wireless business.
Though the company has made chips for devices such as Motorola
) Kindle Fire tablet;
) and Samsung are far ahead in the race. The increasing
competition from players such as these as well as in-house
development efforts of large customers has led TI to turn away
its focus from the segment.
Management is now looking to restructure its businesses by
focusing on its OMAP processors and wireless connectivity on
embedded solutions for the automobiles, industrial and other
non-consumer markets, which have a longer life cycle.
To continue its strong global growth momentum and increase its
market share, TI needs to refine its cost structure. We believe
the restructuring action will bring in stability and steady
earnings growth in the near future. The longer-cycle businesses
will also lend stability to its revenues and the more favorable
competitive climate could help it generate stronger margins.
Texas Instruments is one of the largest suppliers of analog
and digital signal processing (DSP) integrated circuits. The
company's compelling product lineup, increasing differentiation
in its business, restructuring activities and lower-cost 300mm
capacity should drive earnings in the longer term.
The company's third-quarter earnings were up 27.2%
sequentially and exceeded the Zacks Consensus Estimate by 17
cents or 37.8%.
Currently, Texas Instruments has a Zacks #3 Rank (Hold).
APPLE INC (AAPL): Free Stock Analysis Report
AMAZON.COM INC (AMZN): Free Stock Analysis
QUALCOMM INC (QCOM): Free Stock Analysis
TEXAS INSTRS (TXN): Free Stock Analysis
To read this article on Zacks.com click here.