Summary
Texas Instruments Incorporated (TXN) filed an 8-K on June 10, 2003, to revise its second-quarter 2003 outlook. The company now expects sequential revenue growth to be around 5%, down from its previous forecast of 7%. This revision is primarily driven by lower-than-expected sales of semiconductors to wireless customers, who are experiencing weakened demand for handsets and have excess inventory, particularly in Asia. Consequently, TI's earnings per share (EPS) outlook has also been reduced to approximately $0.06, plus or minus a few cents, from the prior expectation of $0.08, plus or minus a few cents. The lower EPS is attributed equally to the reduced revenue and increased restructuring charges. The company has expanded its restructuring actions to include approximately 250 job reductions in its Japan Semiconductor manufacturing operations, bringing total restructuring charges to an estimated $55 million for the quarter.
Key Highlights
- 1TXN is revising its Q2 2003 revenue growth forecast downwards to approximately 5% from a prior expectation of 7%.
- 2The primary driver for the revised outlook is a slowdown in wireless semiconductor sales due to weaker handset demand and excess inventory, especially in Asian markets.
- 3TI now expects sequential growth in its semiconductor segment to be about 2%, revised from an earlier forecast of 4%.
- 4Earnings per share (EPS) for Q2 2003 are now projected to be around $0.06 ( ± a few cents), down from the previously guided $0.08 ( ± a few cents).
- 5Total restructuring charges for the quarter are now expected to be $55 million, an increase from $40 million, due to higher severance costs and new restructuring actions in Japan.
- 6Approximately 250 jobs will be reduced in TI's Japan Semiconductor manufacturing operations as part of expanded restructuring.
- 7Demand for TI's semiconductor products in markets outside of wireless is reported to be robust.