Updated from Oct. 22SAN FRANCISCO -- Texas Instruments' ( TXN) cell-phone chip business has been under siege by rivals for years. Now the first signs of damage are starting to show. The Dallas chipmaker served up lackluster financial guidance for the fourth-quarter Monday, upstaging its 2-cent beat on the bottom line in the third quarter and sending its stock tumbling. Shares dropped $2.22, or 6.5%, to $32.05 in early action Tuesday. TI said revenue in the current quarter will range between $3.4 billion and $3.68 billion -- below the average analyst expectation of $3.71 billion. Chief Financial Officer Kevin March attributed the soft outlook to customers striving to keep inventories in check heading into December, in order to avoid getting caught with excess chip stockpiles in the new year. Perhaps more importantly to some investors, he said handset-maker Ericsson ( ERIC) will buy chips from another chipmaker in addition to TI for some of its most-advanced cell phones. The deal, announced almost a year ago, will take effect in the fourth quarter. "We now have to share that revenue with that supplier," March said in an interview with TheStreet.com. While TI's wireless revenue is typically up an average of 8% sequentially in the fourth quarter, the company said it will likely be flat this year. TI can expect further hits to its cell-phone business in the months ahead.