Earnings Preview: Texas Instruments

OVERVIEW: Texas Instruments is the world's largest maker of chips used in mobile phones. It also makes semiconductors for computers, modems, DVD players and a range of other electronic devices.

The company said in September it expects third-quarter profit toward the high end of its prior forecast, and that growth in high-performance analog chips used in cell phones and other gadgets had been strong. But there has been some concern of slowing demand for its wireless chips from Motorola Inc., one of its top customers. Finland's Nokia Corp., another large customer, reported an 85 percent increase in its third-quarter profit on Thursday.

Also in September, Texas Instruments said it plans to lay off 191 Dallas workers whose manufacturing jobs are being eliminated and who couldn't find other positions at the company.

The layoffs will begin in early November and be spaced out until the end of January. At the time of the announcement, the company was also finishing the last of 233 layoffs from two other facilities in Dallas by the end of the year.

BY THE NUMBERS: Analysts, on average, are expecting a profit of 50 cents per share on revenue of $3.66 billion, according to a poll by Thomson Financial.

The company said in September it expects a profit of 49 cents per share to 53 cents per share for the quarter, on sales between $3.56 billion and $3.72 billion.

TI's previous outlook was for a profit of 46 cents per share to 52 cents per share on revenue between $3.49 billion and $3.79 billion. The revised forecast includes a gain of 2 cents per share from the July sale of a chip product line.

ANALYST TAKE: Deutsche Bank analyst Ross Seymore said he believes the company's wireless segment "is tracking mixed although our recent checks suggest that (orders from) Motorola may have picked up late in the quarter."

The analyst, who rates Texas Instruments shares a "Buy," said the company's leadership in wireless and analog markets "will allow it to continue gaining market share in an otherwise maturing semiconductor industry.

"In wireless specifically, we believe share loss concerns are overblown," he added.

Banc of America Securities analyst Sumit Dhanda said TI's wireless segment benefited from ongoing seasonal strength in handsets and "relatively healthier demand from key customer Nokia, offset by moderate (albeit slightly improving) demand from Motorola."

STOCK PERFORMANCE: Shares of the Dallas-based company fell 3 percent during the quarter to close at $36.59 at the end of September.

The stock has traded in the 52-week range of $28.24 and $39.63.