Texas Profit Instruments posted a smaller-than-expected drop in quarterly profit, but said it may post a loss with the current economic quarter and announced a 12 percent cut in jobs, as interest in cellphone chips fell.
But shares with the maker of wireless and analog chips rose 5 percent in after-hours trading on Monday as analysts said the higher*than*predicted fourth quarter and also the cost-cutting measures meant TI could possibly be positioned for growth when demand recovers.
“The hope is we’ll start to obtain the bottom at these levels. That, in addition to expense reductions, can create a greater flow by means of tha harsh truth when revenue sets out to recover,” said Collins Stewart analyst Ashok Kumar.
TI said hello was cutting its workforce by 3,400 to cut back costs, which American Technology Research analyst Doug Freeman said would “signal a recovery in earnings regardless of whether demand levels don’t improve.”
The corporation warned which it still had tough times ahead, forecasting a possible loss for the first quarter, when utilization of the factories was supposed to fall below 35 percent from 48 percent inside the fourth quarter. It said it expected to idle many factories for a number of weeks in March.
Chief Financial Officer Kevin March told Reuters in a interview the company had no sense of how soon demand would recover as virtually all its customers in most regions and product segments were cutting orders.
“We left the quarter using a suprisingly low degree of backlog, which provides for us considerably less visibility than normal %u2026 We’re get yourself ready for what may very well be a long-term down period throughout the market,Per centu201D March said. “We can barely see out one in four.Per centu201D
The report follows a worse-than-expected fall in profit at TI’s biggest client, Nokia (NOK1V.HE). The planetPer-centu2019s biggest mobile phone maker warned of your industry phone sales decline of 10 percent for 2009.
To the current quarter, TI saw a loss in 11 cents to some profit of 3 cents per share, including a 3 cent restructuring charge. Analysts had forecast money of 3 cents per share excluding the charge, as outlined by Reuters Estimates.
TI saw revenue falling to between $1.62 billion and $2.12 billion in the first quarter, whereas analysts’ average estimate was $2.04 billion, in accordance with Reuters Estimates.
WIRELESS WEAKEST
March declared that while business was weak across the board with total orders down 42 percent, wireless was the weakest with revenue down 29 percent sequentially compared with most of fourth-quarter decline of about 3 %.
TI executives said the company had stopped selling its merchant business, which makes off-the-shelf chips, after actually talking to potential buyers. Instead, it will shut nearly all of its internal efforts for that unit and only support existing customers with minimal staffing.
“As we progressed, it became clear to us that a sale may not achieve exactly the same value that individuals will accomplish by retaining this operation and reducing a purchase levels to the minimal required,” Ron Slaymaker, head of investor relations for the company, said on a call with analysts.
TI said hello expects annual savings up to $700 million from cost cuts, including scaling down the merchant chip business as well as the workforce reduction, such as 1,800 layoffs and 1,600 voluntary departures.
March said about the conference call he expects both U.S. economy and global economy to decline in 2010.
March said on the conference call that he expects both the U.S. economy and global economy to decline this year.
He said the company would continue to aggressively drive down inventory in the first quarter. “I suspect we’ll look back on this and say its the worst downturn we’ve seen,” he said. By the way, please visit best cb products for more valuable things to increase your internet business income.
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