Texas Instruments plans to lay off 650 people and will try to sell its cellular baseband chip division, the company said in its third-quarter earnings announcement yesterday.  The decision is because of slumping sales and should help save $200 million per year in expenses, officials said.

Profit for the quarter came in at $563 million on revenue of $3.39 billion, down from a profit of $588 million on revenue of $3.35 billon last quarter and strongly down from $758 million on $3.66 billion a year ago.

“We entered the third quarter with a cautious view of the economy and its impact on our markets.  Revenue was weak, as expected, because consumers and corporations reduced their spending in this uncertain economy,” said Rich Templeton, who serves as CEO, chairman and president.

“Our outlook for the fourth quarter is for revenue to decline substantially based on weak order trends over the past few months… We also will continue to reduce expenses and capital spending,” he said.

However, “Smartphones are growing rapidly and our handset customers are differentiating their product lines through applications and user interfaces.  We anticipated this opportunity and have been investing in it for more than a decade.  As a result, our OMAP applications processors lead the market, and we will concentrate on extending this lead,” he said.