March 11, 2008: 12:01 PM EDT
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Qualcomm, Nokia fall on fresh signs of a slowdown

Qualcomm announces buyback, higher dividend; Nokia may be seeing a pileup of unsold phones.

By Scott Moritz, writer

(Fortune) -- Note to telecom investors: Uh-oh. Qualcomm announced Tuesday plans to buy back more of its stock and to boost its dividend, sending a clear signal to investors that it's facing a tough year.

A day earlier, mobile phone chipmaking giant Texas Instruments (TXN, Fortune 500) adjusted its guidance for the current quarter to the middle of its previous range. The outlook, while positive on specialty chips, dampened hopes that wireless components, especially 3G semiconductors, were selling in bigger numbers.

In the wake of the revised forecast, analysts pointed to Texas Instruments customer Nokia (NOK) as the reason for the more somber tone. Nokia seems to be cutting back on orders in response to a growing pile of inventory, say analysts.

The trifecta of bad news comes as growth in the wireless industry slows amid spending cuts by telcos and consumers. The wireless industry is feeling the dual pinch of a maturing market and a slowing economy. Global mobile phone sales topped 1 billion last year. But the number of phone owners to non-owners is dwindling, and the pace of growth has slowed.

Wireless industry growth peaked at 31% in 2004, and JPMorgan predicts the rate falls to 15% this year.

Concerns that Nokia may be sitting on an excess supply of phones sent shares of the Finnish shop down 4% Tuesday. And despite Qualcomm's cash gesture to shareholders, its stock fell 1% amid widespread buying in the market after the Fed pledged $200 billion for loans to lenders. Texas Instruments shares slid more than 4%.

After years of rewarding investors with runaway growth, it's not surprising that outfits like Qualcomm have decided to dip into the bank to keep pleasing the crowd.

The San Diego-based wireless giant approved a $2 billion stock buyback program on top of the nearly $3 billion it has already bought. Qualcomm (QCOM, Fortune 500) also bumped up its quarterly dividend by 2 cents, promising shareholders an annual payout of 64 cents a share.  To top of page