Texas Instruments Plans to Cut 650 Jobs

Texas Instruments, which makes chips for cellphones and other devices, warned on Monday that orders were slowing rapidly and said it would cut jobs to save money.

The company said it would reduce its work force by 650 in six countries from a unit that makes chips for cellphones. And it is in talks to sell part of the unit, which has struggled because of a drop in sales at a big client, Motorola.

The company essentially met analyst expectations for third-quarter earnings on Monday, but the chief executive, Richard K. Templeton, said order trends have been weak in the last few months.

Texas Instruments said it expected sales of $2.83 billion to $3.07 billion in the fourth quarter, well below the $3.3 billion that analysts polled by Thomson Reuters were expecting. In the fourth quarter last year, sales were $3.56 billion.

The company expects 30 cents to 36 cents a share in fourth-quarter earnings, while analysts were expecting 44 cents.

There have been other indications that the fourth quarter would be a bad one for semiconductor companies; last week, a rival, Linear Technology, warned of a sales drop.

Investors, however, seemed taken aback by Texas Instruments’ warning. Its shares were down 93 cents, or 5 percent, at $17.05 in extended trading Monday, after the release of the results.

For the third quarter, the company earned $563 million, or 43 cents a share, down 27 percent, from $776 million, or 54 cents a share, in the same quarter last year. Excluding earnings from discontinued operations in the year-ago period of $18 million, income from continuing operations a year ago were $758 million, or 52 cents a share.

Revenue declined 8 percent to $3.39 billion.

Analysts were expecting earnings of 44 cents a share on sales of $3.4 billion. However, their estimates generally exclude one-time charges and benefits. Such items reduced earnings in the quarter by $10 million, or nearly a penny a share.

The job cuts will come from the division that makes so-called baseband chips, which beam a phone call to a cell tower. The cuts will save $200 million a year, the company said.

The unit to be sold is the one that supplies off-the-shelf baseband processors to smaller manufacturers.

Of the 650 layoffs, 350 will be in this unit, said Ron Slaymaker, the vice president for investor relations.

The company has about 30,000 employees.

Resource - The New York Times