TI forecast disappoints

By Sinead Carew

NEW YORK (Reuters) - Chip maker Texas Instruments Inc said on Monday its quarterly profit rose, but forecast results below Wall Street expectations due to cautious customer buying trends across its markets and weaker demand for high-end cell phones.

TI shares fell 2.5 percent in extended trading after the company, whose chips are used in everything from cell phones to industrial products, said it was taking a conservative view for the second quarter amid economic concerns.

"We're just responding to our customers' conservatism. They're managing their inventory very tight," Chief Financial Officer Kevin March said in an interview with Reuters.

March also said demand for third-generation (3G) high-speed wireless phones would increase more slowly than expected.

"Demand will probably increase over time, but at a more delayed pace than customers might have previously expected," March said, referring to the advanced phones, which include as many as four times more TI chips than more basic phones.

March also said chip demand for computer hard disk drive was weaker than expected in the first quarter.

TI's profit rose to $662 million (334 million pounds), or 49 cents a share, from $516 million, or 35 cents a share, a year ago. Excluding a 6 cents per share tax benefit, the latest number met analyst forecasts of 43 cents per share, according to Reuters Estimates.

Revenue rose to $3.27 billion from $3.19 billion.