* TI cuts EPS view to $0.51-$0.55 from $0.52-$0.60
* Cuts rev view to $3.36-$3.50 bln from $3.41-$3.69 bln
* Says Nokia was to blame for sales shortfall
* TI shares recover from 5 pct drop (Adds analyst comments, share price update)
By Sinead Carew
NEW YORK, June 8 (Reuters) - Texas Instruments TXN.N slashed its earnings and revenue forecasts and blamed the shortfall on major client Nokia's (NOK1V.HE) ailing cellphone business.
The chipmaker's stock dropped 5 percent initially. But it later recouped losses and went up slightly after the maker of chips for everything from cellphones to cars reassured investors that all business units -- apart from wireless -- were meeting expectations.
TI had warned in April that revenue from wireless baseband chips -- the main chip in cellphones -- had been hurt by weak sales at its biggest client Nokia (NOK1V.HE), which has had a tough time competing in advanced phones. [ID:nN18221973]
Just last week, the Finnish cellphone maker, which once dominated the global market but has since been eclipsed by the likes of Apple Inc (AAPL.O), warned its second-quarter phone sales would be sharply below forecast. [ID:nLDE7500RE]
"Investors are relieved Nokia's all it is," said Williams Financial analyst Cody Acree, especially with TI having declared plans to shutter its baseband business by the end of 2012.
Barring the hit from Nokia, everything else remained on track for a strong second half, Ron Slaymaker, head of investor relations, told analysts on a conference call.
While baseband chips had still represented 12 percent of revenue in the fourth quarter, that metric would drop to about 6 percent of revenue this quarter.
Some analysts argued that an accelerating decline of the baseband business might be construed as good news. Investors would get a clearer picture, and sooner, of TI's growth businesses: the embedded processors and analog chips used in all types of products with electronics components.
"This is one of those times when bad news is good news," said Gleacher analyst Doug Freedman. "The sooner Nokia's business is out of the numbers, the better the investment community will be able to see the core growth,"
TI's lowered quarterly results outlook comes as the chipmaker continues to recover from earthquake production disruptions in Japan. But on Wednesday, executives said that its recovery efforts in Japan were proceeding along with its expectations.
The company, which plans to buy National Semiconductor Corp (NSM.N) to shore up its footing in analog chips, said it still expects to take a 5-cent hit to its second-quarter per-share earnings -- as previously announced -- from Japan-related costs.
Executives added that some of its customers in the automobile industry continued to grapple with supply-chain issues related to the aftermath of the quake, Japan's largest on record.
TI forecast second-quarter revenue of $3.36 billion to $3.50 billion, well below Wall Street expectations for $3.55 billion, according to Thomson Reuters I/B/E/S. Analyst estimates were at the mid-point of TI's previous target range for the quarter.
The company also cut its earnings per share forecast to a range of 51 cents to 55 cents, compared with its previous target of 52 cents to 60 cents per share. Analysts had expected earnings of 57 cents per share -- a penny above the mid-point of the previous target announced in April.