Texas Instruments Profits Fall, Sees Loss

Jul 23 2001

Texas Instruments Inc., the world's No. 1 maker of computer chips for mobile phones, on Monday said second-quarter earnings excluding one-time items fell 90 percent as customer demand remained low after plunging earlier this year.

TI also warned it expected a pro forma loss in the thir quarter of "a few cents" per share and that third-quarte revenue would decline 10 percent to 15 percent from the secon quarter. The current consensus analyst forecast for the thir quarter is a profit of 4 cents, according to Thomso Financial/First Call.

"Make no mistake, this is a severe downturn, but we now se some signs of stabilization," said Tom Engibous, chairman president and CEO. TI hit a sharp fall-off this year in wha had been a booming market for chips for cell phones and othe digital communication devices, such as high-speed modems, DV players and digital cameras.

The Dallas-based manufacturer of the chips used in abou two-thirds of the world's digital cellular phones sai semiconductor customers continue to reduce inventories in a environment of weak demand for their own products.

The company said that on a pro forma basis, second-quarte income was $50 million, or 3 cents a share, compared with $54 million, or 30 cents a share, in the year-earlier quarter.

The consensus analyst profit forecast was 2 cents pe share, with a range between zero and 5 cents, according t Thomson Financial/First Call.

Revenues were down 31 percent to $2.04 billion from $2.9 billion a year earlier.

Engibous said hopeful signs included a slower decline i semiconductor orders than in the first quarter and an increas in orders for semiconductors for wireless phones Semiconductors account for about 80 percent of TI's sales an wireless chips make up about 20 percent of total semiconducto revenues.

Analysts said the results were largely in line wit expectations after TI warned in April that it expected a dro of around 20 percent in revenues from the first quarter, whe it posted a 17 percent drop from the last quarter of 2000.

"More people will be lowering their third-quarter forecast to a loss, and that will probably put some pressure on th share, although not that much," said Chris Chaney semiconductor analyst at A.G. Edwards. Chaney said he has bee forecasting a loss of 4 cents in the third quarter since April.

TI Chief Financial Officer Bill Aylesworth said it was to early to make predictions for the fourth quarter.

"We can't really say beyond the third quarter," Ayleswort told Reuters.

"We'll have earnings of 21 cents in the firs half, a loss of a few cents in the third quarter and some sign of stabilization and the feeling that we're nearing th bottom," he said, referring to pro forma earnings.

Pro forma numbers are adjusted to reflect a number o one-time charges and gains, including $214 million in severanc costs and $35 million for closing three semiconductor plants i New Hampshire and California. TI announced in April it wa laying off 2,500 people, about 6 percent of its global wor force, for total layoffs this year of about 4,500.

Including those one-time charges and costs, TI said i recorded a net loss of $197 million, or 11 cents per dilute share, compared to a net profit of $1.296 billion, or 72 cent a share, a year earlier.

Texas Instruments shares closed before the earnings news at

$30.80, down 71 cents, or 2.3 percent. The shares have los nearly 35 percent of their value this year, compared to decline of about 10 percent in the broad benchmark SP 50 index.