* 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 Texas Instruments TXN.N
slashed its earnings and revenue forecasts and blamed the
shortfall on major client Nokia's NOK1V.HE ailing cellphone
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
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
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
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
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.
TI shares rose slightly to $32.80 in late trade after
closing at $32.67 on New York Stock Exchange.
(Additional reporting by Noel Randewich and Edwin Chan;
editing by Bernard Orr)