Disappointing sales of flat-screen televisions over the holiday period led Texas Instruments, the Dallas-based semiconductor company, to predict lower than expected revenues and earnings for the current quarter.
TI said sales of TVs and projectors powered by its proprietary ?digital light processing? chips were lower than expected in the last few weeks of 2004, leading to a build-up of inventory among manufacturers.
?Customers are taking aggressive actions to reduce these inventories as quickly as possible,? it said.
DLP is one of TI's most profitable and fastest-growing businesses, delivering revenue growth of 79 per cent during 2004. The technology allows consumer electronics companies to offer large, flat-screen TVs at prices lower than liquid crystal display or plasma alternatives.
TI emphasised that DLP-based TVs and projectors had gained market share over rival technologies in 2004. However, end-of-year sales were weaker than manufacturers had expected.
Revenue for the three months to March is now expected to be $2.9bn$3bn, towards the lower end of the $2.9bn$3.15bn range forecast by the company in January.
In a conference call with equity analysts, Ron Slaymaker, TI spokesman, said all but $10m of the revenue shortfall was attributable to the DLP business.
On this basis, sales of DLP chips appeared to have undershot the company's quarterly targets by about $65m.
Earnings per share would also be lower than analysts had been expecting. TI said first-quarter earnings would be 22-24 cents, at the lower end of its range.
The consensus forecast was for earnings of 24 cents.
DLP chips account for a relatively small portion of TI's overall semiconductor business, which produces chips for mobile phones, digital cameras and other consumer electrics devices.
TI stock shed $1.02 to $26.35 following the announcement on Monday, a decline of 4 per cent.