* Cuts represent nearly 5 pct of workforce
* TI sees charge of $325 mln, annual savings of $450 mln
* Shares rise almost 1 pct
By Sinead Carew and Noel Randewich
NEW YORK/SAN FRANCISCO, Nov 14 Texas Instruments
is eliminating 1,700 jobs, as it winds down its mobile
processor business to focus on chips for more profitable markets
like cars and home appliances.
Texas Instruments said in September it would halt costly
investments in the increasingly competitive smartphone and
tablet chip business, leading Wall Street to speculate that part
of the company's processor unit, called OMAP, could be sold.
The layoffs are equivalent to nearly 5 percent of the
Austin, Texas-based company's global workforce.
"A sale would have been better than a restructuring but a
restructuring is certainly better than nothing," Sanford
Bernstein analyst Stacy Rasgon said.
TI has been under pressure in mobile processors, where it
has lost ground to rival Qualcomm Inc. Leading
smartphone makers Apple Inc and Samsung Electronics Co
Ltd have been developing their own chips instead of
buying them from suppliers like TI.
Instead of competing in phones and tablets, TI wants to sell
its OMAP processors in markets that require less investment,
like industrial clients like carmakers.
TI is expected to continue selling existing tablet and phone
processors for products like Amazon.Com Inc's Kindle
tablets for as long as demand remains, but stop developing new
"This year, the Kindle runs on the OMAP 4 and next year's
Kindle is slated, we believe, for OMAP 5. We believe that
program is well along to completion and do not expect that the
termination of OMAP will disrupt those plans," said Longbow
Research analyst JoAnne Feeney.
Amazon had reportedly been in talks to buy the mobile part
TI said it expects to take charges of about $325 million
related to the job cuts and other cost reduction measures, most
of which will be accounted for in the current quarter. Its
previously announced financial targets for the fourth quarter do
not include these costs, TI said.
The company, which has 35,000 employees around the world,
expects annualized savings of about $450 million by the end of
2013 from the action.
TI shares rose to $29 in after-hours trading after closing
at $28.76, down 2 percent on Nasdaq.