TI, Altera cut Q4 sales targets on weak demand

SAN FRANCISCO—Chip makers Texas Instruments Inc. and Altera Corp. Thursday lowered fourth quarter sales targets, citing broadly weak demand across most markets they serve.

TI (Dallas) said it now expects fourth quarter sales to be between $3.19 billion and $3.33 billion, down from a previous target of between $3.26 billion and $3.54 billion. The company expects to report earnings of 21 to 25 centers per share, down from a previous target of 28 to 36 cents per share.

TI said the reductions were due to broadly lower demand across a wide range of markets, customers and products, except for wireless applications processors.

Altera (San Jose, Calif.) said it now expects its fourth quarter sales to be between $438.9 million and $452.8 million, a decline of 13 to 16 percent compared with the third quarter. The company previously said it expected sales to decline 7 to 11 percent sequentially to between $465 million and $485.9 million.

Altera said its fourth quarter revenue outlook deteriorated across all major vertical markets, including both large and small customers. With the exception of North America , which will benefit from rising military sales, all geographic regions will be weak, Altera said. The company said demand has declined as the quarter progressed due to economic uncertainty, macroeconomic concerns and, in some cases, lower than planned sales. Altera believes it will continue to under ship customer demand in the fourth quarter, the company said.

Ron Slaymaker, vice president of investor relations at TI, said in a conference call following the guidance cut that TI believes it is currently under shipping customer demand and that the company believes inventories among customers and distributors remain low. TI believes the chip industry remains at the bottom of a downturn, he said.

"I would say we continue to be encouraged that we're in the bottoming process even though demand was a little weaker than what we had initially expected this quarter," Slaymaker said.  

Slaymaker said TI's OMAP applications processor is selling better than expected, though he declined to quantify sales of the device. "We expected good growth out of it and it's delivering even better growth," Slaymaker said.

Christopher Danely, an analyst with JP Morgan, estimates that OMAP sales will be worth about $100 million in the fourth quarter, thanks to the processor's socket in the Amazon Kindle Fire media tablet and strength in smartphones.

TI, Altera cut Q4 sales targets on weak demand