TI's (TXN) Lowered Outlook May Indicate Light Amazon (AMZN) Kindle Fire Sales

March 9, 2012 11:11 AM EST Send to a Friend
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Amazon.com (Nasdaq: AMZN) shares are trading lower Friday following a mid-quarter update from Texas Instruments (NYSE: TXN) Thursday afternoon. Shares of Amazon are down about 1.7 percent at last check; TI shares are down about 1 percent.

TI reduced its first-quarter 2012 earnings outlook from a range of 16 cents to 24 cents to a new range of 15 cents to 19 cents. Revs moved from $3.02 billion to $3.28 billion to $2.99 billion to $3.11 billion. The Street was expecting earnings of 31 cents and revs of $3.16 billion.

Given the reaction in the stock this morning, investors in Amazon must be suspecting part of the reason for the reduced outlook was from lower TI-equipped Kindle sales. The Kindle Fire runs on a TI OMAP 4430 processor.

A Susquehanna analyst warned of a possible OMAP chip overbuild in the fourth quarter on expectations of customers like Amazon ramping new product production. The analyst said TI is now simply adjusting for some inventory stockpiling.

Canaccord Genuity echoed the comments, saying weak demand from a few OMAP customers led to TI's adjusted numbers.

Finally, Stifel Nicolaus said TI's move indicates Amazon's Kindle Fire isn't selling as well as the company had hoped.


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Stifel Nicolaus, Susquehanna International Group of Companies, Kindle, Earnings

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