As TI (TXN) Drops Forecast, Trouble For Nokia (NOK) And Motorola (MOT)

Telecom & Wireless

Published: March 11, 2008 4:52 am

Texas Instruments (NYSE: TXN) gave its mid-quarter forecast and no one liked it. The company projected slow growth and was especially gloomy about the sales of 3G chips. It said its largest customer was cutting back orders. Spies disguised as securities analysts were able to figure out that the customer in question was Nokia (NYSE: NOK).

Shares in Nokia tumbled as much as 6 percent today according to Reuters. Nokia will weather the trouble just fine. It is profitable, has an iron-clad balance sheet, and owns 40% of the world’s handset market.

TI’s news is very bad for Motorola (NYSE: MOT). Its market share has dropped from 22% two years ago to about 12%. In 2007, the company’s handset business lost $1.2 billion on $19 billion in sales. In 2006, the division had over $28 billion in sales and profits of $2.7 billion.

Motorola’s stock is at $9.52, near a 52-week low and down from the period high of $19.68. It is shopping its handset business, but there appear to be no takers. The company’s troubles seem to compound by the day.

A share price of $10 may be as good as Wall St. sees for the next year, and the stock could go much lower.

Douglas A. McIntyre

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