TI blames Nokia for lower Q2 revenue forecast

Lower demand for Nokia's phones and services triggers TI to project lower Q2 revenue

Texas Instruments has lowered its revenue forecast for the second fiscal quarter due to lower demand for its products from Nokia.

TI said its lower revenue projection is directly related to the market performance of Nokia, which has been having troubles of its own. The handset maker last week projected lower sales of devices and services due to lower average selling prices and fewer buyers of its phones.

TI is now forecasting revenue of US$3.36 billion and $3.50 billion for the second fiscal quarter ending on June 30, down from $3.41 billion to $3.69 billion the company forecast on April 18 when reporting first quarter fiscal results.

"I would say characterizing as the bulk of it being Nokia is probably understating. Probably being closer to say all of the change in our ... middle-of-the-range update versus what we were previously [projecting] was associated with that customer," said Ron Slaymaker, vice president and head of investor relations at TI, during a revenue forecast conference call that was webcast on Wednesday.

Nokia is the world's largest smartphone maker, but is quickly losing market share to competitors Apple, Research in Motion, Samsung and HTC, according to IDC. Nokia's market share dropped to 24.3 percent in the first quarter this year, falling from 38.8 percent during the previous year's first quarter. Nokia shipped 24.2 million handsets worldwide in the first quarter, growing by 12.6 percent year-over-year. Apple was in second place, with shipments growing 114.4 percent to 18.7 million units, and market share growing to 18.7 percent.

"This is a customer performance in the market issue. This is not a competitor coming on board to displace TI in these handsets," Slaymaker said.

Outside of Nokia, demand for TI's products are tracking as expected, Slaymaker said. The company is benefitting from growing demand for smartphones, tablets and e-readers, while PC-related revenue will be "flattish" on slower-than-expected PC growth. TI supplies chips for products ranging from smartphones and PCs to automotive and medical products.

TI is also continuing to feel an impact of the Japan earthquake on March 11 and ensuing tsunami, Slaymaker said. The company has a manufacturing site in Miho, Japan, which is about 40 miles northeast of Tokyo, and suffered substantial damage from the earthquake. Repairs on the factory are continuing, and the Japan disaster will be behind the company in the second half, Slaymaker said.

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Agam Shah

IDG News Service
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