Tickers in this Article: TXN, INTC, SLAB, NSM
Many companies in the technology sector have reduced or given weak outlooks recently, as the slowdown in the global economy impacts demand for personal computers and other electronic products.

IN PICTURES: 9 Simple Investing Ratios You Need To Know

The Intel Warning
Intel (Nasdaq:INTC) started off the trend back at the end of August 2010, when the company warned that fiscal third-quarter sales would miss estimates by $1 billion. Intel estimated that third-quarter sales would be in a range from $10.8-11.2 billion, a reduction from the previous estimate of a range from $11.2-12.0 billion. Since Intel's warning, several other technology companies have also lowered or narrowed estimates on revenues or earnings.

Things Are Getting Smaller...
Texas Instruments (NYSE:TXN) narrowed the range and cut the top end of its outlook for sales and earnings for the company's third quarter. The company now expects revenue to be in a range of $3.62 billion to $3.78 billion, compared to the prior range of $3.55 billion to $3.85 billion. Earnings for the third quarter were cut to a range of 66 cents to 72 cents compared to the prior range of 64 cents to 74 cents.

The management of Texas Instruments cited a slowdown in demand for a range of products, including personal computers, storage devices and televisions.

The National Decline
National Semiconductor (INTC:NSM) released a revised outlook for the second quarter of fiscal 2011, and said sales would be between $390-415 million. This would represent a sequential decline of 5% at the high end of the range, and no growth at the top end.

During the conference call, the management of National Semiconductor said that after extensive checks with the distributors of the company's products, "the rate of growth is still there, but it is slowing down in the end marketplaces that they do serve." The company added that it did not have much visibility on end market demand beyond the third quarter of fiscal 2011.

News from the Lab
Silicon Laboratories (Nasdaq:SLAB) is also seeing a slowdown in demand. The company originally forecasted sales for the third quarter to be in a range of $136 million to $141 million. In early September 2010, Silicon Laboratories cut the range to $118 million to $122 million. The management of Silicon Laboratories said that the lower demand was primarily in the "customer premises equipment and consumer end markets."

This was the second time in five weeks that the company has reduced estimates for the third quarter. At the end of July 2010, Silicon Laboratories cut sales estimates due to lower demand from Europe and from the handset market.

The Bottom Line
Many technology companies have reduced guidance or outlook for the upcoming quarter, as the global economic slowdown reduces demand for consumer products in the technology space. (For more, see our Industry Handbook: The Semiconductor Industry.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

comments powered by Disqus

Trading Center