Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Texas Instruments Fails To Impress


Semiconductor leader could use a deal or two.


As I said in yesterday's Buzz, Texas Instruments (TXN) is suffering from two issues, which I will not belabor again here. I would not assign the broad based weakness in TXN and the guide down, which potentially translates to 20% lower revenues over prior year, to the whole wireless or analog chip space.

In my view, TXN has needed to make a transformative acquisition for some time and given the money it has spent on stock buybacks, it could have digested a good number of smaller wireless, networking and storage chip makers. Either that or it could have acquired a leader in one of those spaces.

Bottom line, I wouldn't use TXN as the baseline for semiconductors in general given its specific issues. Intel (INTC), for example, reported numbers that were not nearly as poor, and I wouldn't call the current PC or Servers space hotbeds for economic activity.

Yesterday, I thought the sub $16's would present a value level for TXN and so far that seems to have held. TXN is still quite profitable and the cash flow yield is very high. Future catalysts for TXN would be a more aggressive acquisition profile and the pickup in Chinese cellular, which should occur as their overhaul takes place.

Meanwhile, I would rather favor chip names such as INTC, Applied Materials (AMAT), Microchip Tech (MCHP), or those companies in the networking space as I feel the respective situations are better and subsequent recovery will be stronger. However, TXN could change that assessment with one or two really smart deals.

Actionable ideas, instant analysis. Real-time from bell to bell.
Minyanville's Buzz & Banter - 14 day FREE trial

< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos