Texas Instruments cuts qtrly profit, revenue targets

NEW YORK (Reuters) – Texas Instruments cut its quarterly earnings and revenue forecast as the chip maker scrambles to recover from earthquake production disruptions in Japan, and Nokia — a big customer, is struggling with weak sales of its cellphones.

The company’s shares slid 5 percent to $31 in after-hours trading, compared to a regular-session close of $32.67.

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.

The maker of chips used in everything from cellphones to industrial equipment did not immediately explain the earnings and revenue shortfall Wednesday but one analyst said it was likely related to Japan and a recent profit warning at Nokia , TI’s biggest wireless customer.

“It’s got to be a greater issue in Japan,” said Williams Financial analyst Cody Acree. “The likelihood Nokia is a good portion of this is also there.”

But if it turns out that TI is seeing weak demand in its core business segments such as analog chips, this would be much more troubling for investors, Acree said.

TI was expected to give more details in a conference call scheduled for 5 p.m. ET on Wednesday.

In April, the chipmaker had warned of slower-than-normal sales growth as Japan’s massive earthquake continued to disrupt supply and production, adding that it could not say for sure when supply of the wafers it needs will recover fully.

The company, which plans to buy National Semiconductor Corp to shore up its footing in analog chips, also took a hit to its bottom-line from expenses related to recovering from the aftermath of the quake, Japan’s largest on record.

It also said at the time that first-quarter revenue from wireless baseband chips — the main chip in cellphones — was cut by weak sales at one customer. TI’s biggest baseband client is Nokia, which has had a tough time competing in advanced phones. (Reporting by Sinead Carew; editing by Bernard Orr)