Revenues exceeded expectations by ~100 mil with gross margins of 44%, significantly above the street. Inventories dropped 200 mil q/q. The company indicated next quarter’s sales will fall to ~1.85 bil at the midpoint, which is roughly 10% worse than the consensus estimate of 2.1 bil – but most previews had suggested some downside there. Based on their comments that gross margins should decline in a ratio proportionate to this past quarter’s, GM should come in at roughly 41%, which is better than the ~39 the street has modeled. The company is laying off 12% of the workforce to reduce costs.
As Texas Instruments is very Nokia dependent and Nokia recently lowered their forecast significantly, the revenue downside is largely factored in. Truthfully, the margins are somewhat baffling – one wouldn’t expect them to hold so well. The stock likely drifts higher on the report.