Shares in Texas Instruments Inc. fell Tuesday after the chip maker reported that first-quarter profit and revenue tumbled as competition heightened and demand for its chips shrank amid the recession.
Texas Instruments has a plant in Tucson.
In reporting financial results Monday, the company said customers have begun to whittle down inventories of TI’s chips, which are used in cell phones and other gadgets. Orders for TI chips have risen each month since hitting bottom in December.
The results beat the company’s own expectations as well as Wall Street’s, but executives stopped short of declaring a rebound.
“We remain cautious,” said Ron Slaymaker, vice president of investor relations. “What we’re really watching for are broad-based increases in consumption and we’re not seeing that today.”
Shares fell 30 cents, or 1.7 percent, to $17.02 in morning trading Tuesday, when many tech stocks rose.
The Dallas-based chip maker posted a profit of $17 million, or 1 cent a share, during the first quarter, down 97 percent from $662 million, or 49 cents a share, in the same period last year.
Excluding a restructuring charge for job cuts, TI earned 7 cents a share during the latest period. Analysts polled by Thomson Reuters expected a profit of 3 cents a share.
Revenue tumbled 36 percent to $2.09 billion from $3.27 billion. Analysts expected revenue of $1.9 billion.
TI’s profit and revenue estimates for the second quarter were rosier than Wall Street forecasts. The company projected a profit of 1 cent to 15 cents a share, compared with the analyst estimate of 2 cents a share. TI’s estimate includes a charge of 5 cents a share for restructuring costs.
The company estimated second-quarter revenue of $1.95 billion to $2.4 billion, compared with the analyst estimate of $1.94 billion.
Demand for TI’s chips has shrunk amid the recession, prompting deep job cuts. Slaymaker said the company remains committed to plans announced in January to cut 3,400 jobs, or 12 percent of its work force, through layoffs or attrition.
TI expects annual savings of $700 million when combined with another round of cuts announced in October to eliminate 650 jobs.
Still, there have been some encouraging signs.
Last month, TI revised its estimate of first-quarter revenue toward the high end of its January prediction, suggesting that sales were not as weak as the company initially feared. TI has lost its dominant grip on the market for chips that run many functions of cell phones. Nokia Corp., the world’s largest handset maker and a major TI customer, has shifted to multiple suppliers.
TI has turned its focus to other areas: Its largest division makes “analog” chips used in digital music players and other gadgets, while its “embedded” division makes small computers that go into machinery and cars.