Texas Instruments Inc. has more than $3 billion in cash, a cushion that will allow the Dallas chip maker to continue investments in capital and R&D despite the current industry slump, executives said today.
"In every other downturn, we have changed our priorities to cash flow, cash flow, cash flow," said Tom Engibous, TI chairman, president and CEO. "It makes it hard to come out the other side stronger."
But this time, TI has more than $3 billion in the bank, in addition to its Micron shares which are worth about $2 billion, said Engibous.
Engibous' comments during the company's 2001 financial analyst meeting in Dallas comes on the heels of TI's announcement just two days ago that the company would see a 20% decrease in first quarter sequential revenue from the $3 billion in the previous quarter. Order cancellations and delivery rescheduling by customers were reasons TI gave for the revised forecasts.
At that time the company also announced plans to lower its capital spending for 2001 to $2 billion, a decrease of 30% from $2.8 billion in 2000.
Engibous said today that the $2 billion is sufficient to support the company's most important strategies, such as building 300mm wafer manufacturing for DSP and converting 200mm wafer manufacturing for analog. TI is also increasing R&D spending to $1.7 billion, versus $1.6 billion in 2000.
"Our strategy is to not spend one nickel on discretionary expenses that do not win a design slot or have a long term strategic impact," said Engibous.
Other cost cutting strategies implemented by the company include a hiring freeze, a payroll reduction through voluntary retirements, and idling plants during the first quarter to reduce operating costs.