2nd UPDATE: Texas Instruments Narrows 3Q View; Midpoint Same

Texas Instruments Inc. (TXN) on Thursday narrowed its third-quarter guidance, keeping the midpoint unchanged as the chip maker continued to benefit from demand for its analog and embedded chips.

TI now expects per-share earnings between 66 cents and 72 cents, narrower than the previously predicted 64 cents to 74 cents. The company sees revenue of $3.62 billion to $3.78 billion, compared with its earlier view of $3.55 billion to $3.85 billion.

Shares slipped 1.4% to $23.50 after hours, though the revision was largely as analysts expected. TI had raised its guidance to the high-end of its range in the past several quarters, and investors may have been hoping that trend would continue.

"It's definitely a momentum shift to only be tightening around the midpoint," Oppenheimer analyst Rick Schafer said. "They're not missing the quarter, but they're not on track to beat the quarter, either."

On a call with analysts and investors, TI spokesman Ron Slaymaker said the company's embedded processing business, which makes chips for power management and other applications, has shown the strongest growth because of the industrial and wireless infrastructure markets.

Meanwhile, TI, like other chip makers, said areas exposed to personal computers, such as hard-disk drives, are underperforming, as are other areas exposed to consumers, such as TVs.

Semiconductor companies, like Intel Corp. (INTC), recently have warned of softening demand after benefiting from a sharp rebound in demand following the recession. Thursday, power-management chip maker National Semiconductor Corp. (NSM) added to the recent cautious comments by saying slower growth in its end markets and distribution channels, as well as likely inventory reductions, would mute normal seasonal growth.

For TI, its broad line of chips--used in everything from cell phones to industrial equipment--has helped buffer it from some of the recent weakness in consumer spending. The company is in the process of winding down its business selling some mobile chips while expanding its business selling analog and embedded chips. TI also has a new factory that it expects will allow it to gain market share from competitors.

Analysts have said TI is less likely to suffer from a slowdown in spending on PCs because of its exposure to broader markets, but they also have cautioned no chip makers are completely immune to weakness in the sector.

In July, TI reported second-quarter results just below Wall Street's expectations. Although its profit increased sharply and its quarterly operating profit set a record, the results weren't enough to impress investors, who had expected earnings surprises similar to those posted by Intel and Advanced Micro Devices Inc. (AMD).

TI shares are down 8.5% year to date, narrower than the 10.8% decline in the Philadelphia Semiconductor Index.

-By Shara Tibken, Dow Jones Newswires; 212-416-2189; shara.tibken@dowjones.com

(Kathy Shwiff contributed to this article.)

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