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TI details shift into communications

Texas Instruments Inc. (NYSE: TXN) said it sees third quarter revenues accelerating as its semiconductor business remains strong. The company also said it is increasing its focus on Internet communications by diverting some analog design engineers into the telecommunications and networking departments.

The company issued a press release outlining what president and CEO, Tom Engibous, plans to say at the Banc of America Securities 30th Annual Investment Conference in San Francisco, Tuesday. Shares in the semiconductor company were down 0.94 to 58.25 Tuesday morning. Shares got a boost recently from semiconductor upgrades.

In order to take advantage of the high-growth telecommunications and data networking markets, Engibous said that TI is re-deploying more than 100 analog design engineers, and will discontinue its work in read channels.

The company's catalog revenue has grown more than 50 percent year-on-year for four consecutive quarters, and now accounts for about 17 percent of total semiconductor revenue. The success is due in part to an expanding product line, and the company anticipates more than 10,000 design wins this year for its catalog analog products.

Other growth projections included those for the company's semiconductor business, which it said would be strong in its second-quarter report. Revenue is expected to grow faster in the third quarter than it did in the second quarter; Engibous said it would grow even faster if not for capacity constraints, most notably in analog.

On the wireless front, the company said that even in a tougher wireless handset market, revenue should equal or exceed last quarter's. TI expects to ship 60 percent more digital baseband digital signal processors (DSPs) in 2000 than it did in 1999. TI also revised its earlier forecast of 435 million handsets shipped this year to a range of 400 to 435 million units. Engibous also noted that a big driver of future wireless handset growth will be high-speed data access. Volume rollout of handsets with this capability should start shipping next year.

Growth in hard-disk drive is expected to resume this quarter due to strength in preamp and servo driver products.

The only glum forecast it for TI's calculator business; its seasonal peak has shifted into the third quarter. Though revenues for the calculator business will grow from the second quarter and slightly year over year, the third quarter won't be as strong as expected.