Texas Instruments tallies and cuts

Texas Instruments on Monday delivered a quarterly report showing a drop in quarterly profits -- but it's not as bad as some were expecting. The nation's second-largest chipmaker also announced plans to cut 12% of its workforce over the next two quarters, and said that factory utilization is expected to dip to 35% during the current quarter.

The cuts are expected to include both layoffs (1800 people) and voluntary retirements (1600 people, or so the company hopes). The firm estimated on its earnings call that the effort will cost around $300 million in severance and related expenses.

TI is, among other things, saddled with winding down its once-lucrative merchant chipset business. (Those chipsets were once widely used by mobile-phone manufacturers, especially Nokia; these days, phone manufacturers generally use multiple supply sources for those basic chips, and TI would prefer to offer more sophisticated OMAP applications processors for smartphones.) During their last quarterly call TI said they were attempting to sell off that division of the company; they've given up and are now treating it as "end-of-life" technology.

And now? Company executives, who like the rest of us have been watching the plummeting sales reports from mobile-phone manufacturers such as Nokia (TI's biggest customer), aren't making any long-term predictions at this point. The earnings report states baldly that the company is "not counting on a near-term economic rebound for improvement."

For the quarter just ended, TI reported revenue of $2.49 billion and net income of $107 million, which works out to earnings per share of eight cents. That's lower than the company's previous prediction of 10 cents/share, but better than the market expected to see, so in after-hours trading the company's stock actually rose 75 cents, or a bit over 5 percent, in after-hours trading.