True to form, Texas Instruments (NYSE: TXN) did its mid-quarter guidance update last night. The news wasn't good, as the new midpoints of both revenue and earnings targets fell at the bottom of the original ranges. The market reacted as you'd expect: with brutal efficiency. When the report hit the newswires, TI shares immediately fell by 5%.

But the gloom didn't last long. As soon as management got on the conference line to explain things to analysts, the drop started to reverse. This morning, shares opened slightly above Wednesday's closing price.

You see, everybody already priced in the main driver of this lowered guidance -- it's just that the press release didn't mention it. "The reductions are due to lower demand from a single wireless customer, where most of our sales are baseband products," said investor relations veteran Ron Slaymaker, unleashing a huge collective sigh of relief. Oh, it's just Nokia (NYSE: NOK) poisoning the well.

Elaborating further, Slaymaker twisted the knife a bit deeper into Nokia's heart: "In fact, I would say characterizing as the bulk of it being Nokia is probably understating. It'd be closer to say that all of the change in the middle of the range update versus what we were previously was associated with that customer." If not for that toxic customer, TI would simply have narrowed its guidance down around the center of the original range.

One reason for TI shareholders not to lose sleep over Nokia's troubles is that the chip giant is already removing the Finns from the equation. TI has been winding down its baseband radio chips for some time, basically handing that business off to Broadcom (Nasdaq: BRCM), Renesas, and STMicroelectronics (NYSE: STM). Nokia's baseband needs made up 12% of TI's revenue last year but will drop to less than 6% next quarter -- and only partly due to the building of fewer phones at Nokia.

So, other than the Finnish situation, it's simply business as usual for Texas Instruments. The stock has been a reasonable proxy for the S&P 500 index all year long, and this update does nothing to change that performance profile.

The analog chip sector is riding the smartphone and tablet waves like Duke Kahanamoku on a catamaran surfboard. The opportunities ahead are not without their challenges, as the downfall of Nokia shows. The best way to stay ahead of the surf is to keep a close eye on the sector, and our My Watchlist feature helps you do exactly that. Enjoy every morsel of Foolish analysis on your favorite tickers:

Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Motley Fool owns shares of Texas Instruments. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.