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Texas Instruments Narrows Its Range

The company says revenue will be toward the high end of estimates, but takes a penny from the top of its EPS range.

Updated from 6:34 p.m. EDT

Reflecting strengthening demand across its semiconductor lines, chipmaker

Texas Instruments

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narrowed its third-quarter sales expectations to the upper half of the company's prior forecast and said prices in certain standard silicon have been firming.

But while sales were tilted toward the high end of expectations, the company also lopped the top off its best-case EPS scenario. After the close shares dipped 82 cents, or 3.2%, to $24.50.

At Legg Mason, analyst Cody Acree said the update was "exactly as expected. It's good to see continued confirmation of the strength in wireless, building in both seasonality and economic activity. TI is getting not just handset strength but said for the first time in a long time that all the end markets are functioning in unison: PCs, handsets, consumer, automotive; they're all doing well." He has a buy rating on TI; his firm hasn't done banking for it.

After the bell, TI said it expects overall revenue to total between $2.39 billion and $2.49 billion, compared to its July forecast for a range of $2.29 billion to $2.49 billion.

Semiconductor sales are expected to range from $1.99 billion to $2.07 billion, compared to a prior range of $1.89 billion to $2.05 billion.

On the downside, guidance for TI's calculator division was narrowed to the downside, with revenue expected to fall between $165 million and $175 million, compared to a previous range of $170 million to $190 million.

Earnings should total between 20 cents and 22 cents, which reflects a contribution of 13 cents a share from a previously announced sale of 24.7 million shares of


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stock. The latest estimates also reflect an R&D-related charge of about $23 million related to the acquisition of Radia Communications, which was completed after previous guidance had been given.

Previously, TI had projected EPS of 19 cents to 23 cents.

On a pro forma basis, analysts are expecting earnings of 8 cents a share.

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"In wireless, historically we would expect sequential growth in the third quarter as customers build for the end of the year season, and that growth is turning out to be somewhat stronger than we had expected," said CFO Bill Aylesworth on the conference call.

Aylesworth also noted prices have been firming for some standard logic chips. "It's not unusual for the point in the cycle where we're well off the trough, but this is different from the last several quarters where pricing has been very aggressive generally in that market," he said.

Separately, Aylesworth noted that yesterday TI filed to dismiss

the lawsuit filed against it by


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in July. The suit claims TI breached the confidentiality of a patent agreement between the two companies. "We continue to believe the Qualcomm suit is without merit and we will contest it vigorously. These legal maneuvers are not distracting us from pursuing the CDMA and CDMA chipset market where we will sample prospective customers this month," Aylesworth said.

News From Elsewhere

Presaging the good news at TI, one of the company's biggest customers, lead global handset vendor


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, had said earlier Tuesday that its handset sales were strong, with third-quarter units likely to grow over 10% from last year's levels.

TI draws about 30% of its sales from the wireless market.

In a separate sign of wireless momentum, yesterday another cellphone chipmaker,

RF Micro Devices



said the market for its chips had been "robust" and issued a forecast that surpassed analyst estimates for the current quarter.

Additionally, chipmaker


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today affirmed its prior guidance for September quarter revenues to be flat to slightly up from June levels of $313 million. Analysts are gearing for revenue of just under $317 million and EPS of 21 cents.

Xilinx makes silicon that goes into a broad swathe of products, from communications to the storage and server markets, with customers that include


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