Texas Instruments (TI, Dallas, TX) reports that revenue for the first quarter of 2001 will be lower than previously expected due to the economic slowdown. The company stated that first-quarter revenue will decline about 20 percent compared to the fourth quarter, instead of its previous estimate of about 10 percent. Due to the additional drop in revenue, pro forma operating margin is expected to decline about six to eight percentage points, instead of the earlier estimate of five to six percentage points.
Earlier in the quarter, TI began a phased cost-reduction plan to limit the impact of reduced revenue on profitability. Actions include the temporary idling of manufacturing facilities and shortened workweeks in some areas. Throughout the company, TI has put a temporary freeze on hiring, has significantly cut discretionary expenses such as travel, and has announced a voluntary retirement program. Additionally, the company has lowered its capital spending plans for 2001 to $2 billion, a 30 percent reduction from last year's $2.8 billion.