Earnings Preview: Texas Instruments

Texas Instruments (TXN) is expected to report Q3 earnings Monday Oct. 20 after market close, with a conference call scheduled for 5:30 pm ET.

Guidance

The consensus estimate is 44c for EPS and $3.4B for revenue, according to First Call.

Analyst Views

Texas Instruments had surprised analysts in early September by affirming its outlook, especially after a market-share warning from its top customer, Nokia (NOK). TI's dominant position in the market for cell-phone chips has been shaken by the shift among some top customers to a multi-supplier strategy. Nokia, its biggest customer, has decided to work with other suppliers such as Broadcom (BRCM) and STMicroelectronics NV (STM). Ericsson (ERIC) also began working with other chip makers, including STMicroelectronics.

Estimates for Texas Instruments were reined in on the Street after the company sounded a note of caution regarding increased competition and anticipated share loss in wireless, on the mid-quarter update. At that time, management guided to Q3 EPS of 42c to 46c and revenue of $3.33B to $3.47B -- both in-line with estimates at the time. Since then, the stock has receive a few rating downgrades on the Street.

On Oct. 16 Collins Stewart lowered their rating to Sell from Hold, citing deterioration in key end markets. Overall, analysts expect Texas Instruments to post lower sales and a muted outlook amid much market uncertainty. Thomas Weisel believes TI will deliver Q3 results in line with its 44c and $3.4B estimates, but are incrementally concerned about the company's overall backlog visibility into the December quarter. Echoing that sentiment, Deutsche Bank also said in a research note that, "Given the weak order trend activity as suggested by semiconductor peers, they believe TI's Q4 outlook is likely to be similarly soft."