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No?big spring quarter surprise was possible?from Texas Instruments, because the company had already narrowed its revenue guidance to a tight $3.28 ? 3.42 B channel just last month, pegging the earnings range for 32-36 cents. Sure enough, EPS at $0.38 and sales at $3.34 B?fit the spring expectations.
So it?s?all riding on autumn guidance, which included this unsettling language: ?Our backlog grew last quarter but orders slowed in the month of June and our backlog coverage for September is lower than normal.? As a result of this increased uncertainty, we currently estimate that our revenue in the third quarter will be about even with last quarter and below our seasonal average growth rate.?
Investors were expecting a healthy, $200 M sequential uptick in sales to $3.54 B in the ongoing quarter. What they got was flat QoQ guidance.
It?s easy to view TXN as a solid rebound candidate ? the share price has tumbled from $34 to $27 in a matter of months, and unless Europe spirals into a deep recession, the company is well-positioned to benefit from its new diversification drive. But that?s just it. It does look like Europe may be lurching towards disaster. The Alcatel Lucent infra warning form last week shocked the markets, even coming from a serial warner. The retail sales decline in Italy has suddenly accelerated close to -7%, and in Spain it has flirted with -9% year-ver-year declines. Vodafone unsettled Telefonica and Telecom Italia investors on Friday by announcing 10% and 7% revenue declines?by its units in?Spain and Italy.
The TXN?comment about?a June slow-down was precisely what has been concerning the?telecom sector on both handset and infra sides. The fear is that there was a sudden softening in orders during June in Europe and Asia after a decent first two months for the quarter. And the spread of debt crisis from Greece to Spain-Italy axis in July will only make things worse.
The TXN guidance language supports the theory of European demand slowing abruptly during June as the debt crisis started dominating headlines. The?emerging signs of softness in Asia probably partly stem from the weakening European order picture. On its own, Qualcomm?s hesitancy about smartphone/tablet?volumes, AMD?s sudden weakness in China and Nokia?s continuing Chinese tailspin could be company-specific air pockets. Taken together with TXN commentary, we are beginning to see a wider picture of how Europe?s troubles are beginning to impact a spectrum of tech names, from ALU to Vodafone.
Source: http://www.forbes.com/sites/terokuittinen/2012/07/23/texas-instruments-and-europes-long-shadow/
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