Did the Kindle Fire Kill TI's Quarter?

Texas Instruments (NYS: TXN) bucked the trend Friday by trading down while the market generally jumped on a strong jobs report. That's the fallout from a weak midquarter guidance update by the chip giant, wherein TI tightened both revenue and earnings guidance around the lower end of earlier projections.

TI blamed the disappointing progress on lower demand for its wireless products, a category that includes chips for managing radio signals but also the high-profile OMAP line of mobile processors.

Digging deeper into the shortfall, OMAP turns out to be the biggest contributor to this weakness. TI saw a bunch of new OMAP-based smartphones and tablets introduced in the fourth quarter, and many of these simply didn't catch on with consumers the way they were supposed to. In the more politically correct words of TI spokesman Ron Slaymaker, TI's customers "are now rationalizing both their expectations for ongoing demand, as well as the associated inventory."

Some would pin this on the Amazon.com (NAS: AMZN) Kindle Fire, which sports an OMAP processor and certainly launched to great fanfare in the fourth quarter. If that product were a dud, it would absolutely hurt TI's OMAP sales. Amazon shares fell about as far as Texas Instruments' on Friday.

That may be part of the problem, but it isn't the whole story. The Kindle Fire is a tablet; Slaymaker said that the OMAP weakness applied to the smartphone segment about equally. The most important OMAP-powered smartphones launched late in 2011 were the Droid Bionic and Droid RAZR -- a pair of Motorola Mobility (NYS: MMI) handsets selling exclusively through Verizon Wireless. Look to those companies for a fuller understanding of TI's woes.

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