Texas Instruments Inc. warned that current quarter sales and earnings would be lower than expected after the SARS outbreak hurt chip sales in Asia.
The weak outlook from TI was the third warning from a major cell phone supplier this week linked to disruptions in Asia from Severe Acute Respiratory Syndrome, or SARS. Fears of contracting the virus kept people away from stores and Chinese cell phone suppliers have stepped up their competition, hurting sales in Asia by Nokia, Motorola Inc., and TI, analysts and executives said.
TI said it now expects sales to rise about 5 percent from the U.S. $2.19 billion in the first quarter, instead of the 7-percent quarter-on-quarter increase it had originally forecast. TI forecast earnings per share of about $0.6, instead of its earlier outlook for about $0.8.
The lower profit was the result of slower sales, a bulge of slow-moving cell phone chip inventories in Asia, and higher restructuring costs, TI said. Total restructuring charges for the quarter are now expected to be about $55 million instead of $40 million, primarily due to higher-than-expected severance costs and the addition of 250 job cuts in Japan, the chip maker said.
Tom Engibous, TI's chairman, president and chief executive, said inventory of wireless semiconductors in Asian markets, particularly China, which would have been successfully worked through under normal conditions, was stalled as demand weakened in those markets, due to SARS, "and should abate as the health concerns are resolved."
TI said demand for the company's semiconductor products in other markets continues to be robust. (Reuters)
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