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Texas Instruments rosy on wireless

TI says business is being helped along by its GPRS products. But it's not the wireless data capabilities consumers are after in cell phones--it's the color screens.

    NEW YORK--Texas Instruments said Wednesday that its business is being helped along by its wireless chip efforts.

    Speaking at the Bear Stearns technology conference here, Rich Templeton, chief operating officer for TI, said sales of the company's chips used for GPRS-enabled phones, have been strong.

    In TI's first quarter, GPRS (General Packet Radio Service) products accounted for 25 percent of revenue, and are expected to account for about 50 percent in upcoming quarters.

    The news comes despite numerous problems with GPRS systems. U.S. wireless carriers have had trouble enabling GPRS networks, and analysts say the phone debuts haven't been a big hit.

    So why is TI seeing strong sales? For starters, the company can sell the GPRS components even if sales of the phones don't immediately take off. But the bigger reason, according to Templeton, is that consumers want color displays. The GPRS data capabilities are an afterthought.

    "People are not running out to buy phones for GPRS, but are buying them for color screens," said Templeton.

    That stroke of luck may help solve the "chicken and egg" problem surrounding GPRS networks. Templeton said there may be enough people with GPRS phones to make it worth content providers' time.

    On other fronts, Templeton said Texas Instruments' second quarter is on track, echoing the company's statement last week. The company is expected to report earnings of 6 cents a share for the second quarter, ending June 30.

    Bear Stearns analyst Charles Boucher questioned how TI could be comfortable with its quarter, given that many of its wireless customers are struggling. Templeton said the company has better inventory management and can adjust better than it could in the past.

    But that can't last forever.

    "We'll have another quarter of growth, and then we'll have to see an increase in customer demand," said Templeton.

    TI also said it would be cut prices on wireless LAN (local area network) products to boost demand.

    Templeton said the three most important product areas for company are wireless voice and data, broadband, and home products such as chips in washing machines and other appliances.

    "We're going to be more aggressive to push these technologies forward," said Templeton.