Texas Instruments sees slowdown in chip sales
In the midst of a record third quarter, Texas Instruments announced slumping sales may have a negative effect on fourth quarter earnings, according to The Dallas Morning News
The company, known for chips used in cell phones and other products, said customers in some countries are buying low-end models that bring less chip revenue to TI. Customers that were worried about chip shortages also have replenished their inventories, and feel less urgency about buying, said Ron Slaymaker, TI's vice president of investor relations.
The Dallas-based company reported its third quarter revenue increased to $3.78 billion, a 13 percent increase from the year ago quarter. The quarter’s net income increased to $702 million, up from $631 million a year ago.
Despite the financial upswing, the company warned investors that buyer cutbacks in the cell phone chip division could affect fourth quarter results.
“Orders declined, leading us to expect that fourth-quarter semiconductor growth will be below the seasonal average,” Rich Templeton, chief executive officer, said in a statement.
Chief Financial Officer Kevin March told the Journal that Texas Instrument’s chip delivery process was streamlined, getting product to their destinations faster. In turn, customers aren’t ordering their chips as far in advance.
Texas Instruments manufactures semiconductors and digital signal processing equipment used in Internet, cell phone and other consumer electronics. The company also manufactures educational and professional computer devices.
recently teamed with United Kingdom-based Ideaworks3D Ltd. to create a gaming platform for mobile handsets.
Dubbed the OMAP Gaming Platform, the system allows game developers and publishers to create “console-quality” mobile games easier with less financial detriment, and the games can run on any of the leading open-source mobile platforms including Symbian, Linux and Windows Mobile.
“Mobile games are starting to emerge as a killer app with some analysts reporting as much as 66 percent revenue growth for the mobile gaming industry,” Richard Kerslake, worldwide general manager of 3G and OMAP processors said in a statement.
The platform is expected to launch in the first quarter of 2007.
According to The List database, the Atlanta office of JWT Technolgy, a division of New York-based JWT, has handled Texas Instruments' creative work since 2005. The company spends about $29.2 million annually on media, according to Nielsen Media Research.
With chip sales slowing, we’d suggest a coordinated B2B campaign to drum up sales to cell phone makers. Perhaps TI could use an awareness campaign (similar to Intel) to convince manufacturers that its worth putting Texas Instrument chips in their products.
We’d also suggest interactive agencies approach Texas Instruments with ideas on how to best market the OMAP platform; with profits declining, the company should be eager to cash in on its “killer app” offering.