SAN FRANCISCO – Texas Instruments Inc. (TXN), the largest maker of chips for cell phones, Wednesday trimmed its quarterly revenue outlook, making it the second major semiconductor supplier to pare back expectations for the third quarter.
Dallas-based TI said it now expects revenue between $3.1 billion and $3.24 billion, and earnings of between 27 cents and 29 cents per share. Previously, TI forecast revenue in the range of $3.2 billion to $3.44 billion, with earnings of between 26 cents and 29 cents per share.
TI blamed the revenue shortfall on swollen inventories at customers it said were moving "quickly to reduce inventory levels to more closely match their own end-equipment growth rates."
The chip maker did not cut back its profit forecast, in part because its effective annual tax rate was reduced to 26 percent from 29 percent as a result of a tax benefit from export sales.
Last week, Intel Corp. (INTC), the world's largest chip maker, cut its quarterly revenue and profit margin forecast amid weaker demand for computer microprocessors and communications chips.
Cody Acree, an analyst with Legg Mason, said TI's cuts were largely expected by Wall Street after recent negative comments from National Semiconductor Corp. (NSM), Analog Devices and Intel. Still, semiconductor demand should recover after inventories are worked through, he added.
"I don't believe that this signifies any major structural breakdown of semiconductor end-demand, because to get that, we'd have to get a structural breakdown of economic growth and we don't believe that's the case," Acree said.