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Technology Stocks : Texas Instruments - Good buy now or should we wait?
TXN 176.88-0.1%Dec 26 9:30 AM EST
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To: robert w fain who wrote (1522)10/1/1997 9:47:00 AM
From: Skeeter Bug   of 6180
 
robert, this is quoted from txn's latest eps release on yahoo!:

>>Semiconductor revenues were up 17 percent from the second quarter of 1996, and up 10 percent from the first quarter of
1997. The major portion of the increase was due to higher sales of digital signal processing solutions, which represent more
than 40 percent of total semiconductor revenues. With the completed divestitures, semiconductor now constitutes about 80
percent of TI's total revenues.

Semiconductor PFO increased fourfold versus the year-ago quarter, and more than 45 percent versus the first quarter of 1997,
excluding special charges. Solid gains were made in manufacturing productivity. Semiconductor operating margin increased 10
percentage points from a year ago, and was up 4 percentage points from the first quarter of 1997.

The loss in DRAMs narrowed for the third consecutive quarter. However, pricing pressures increased in the latter part of the
quarter, keeping pressure on the DRAM business in the near term.<<

notice a couple cogent points.

1. dsps are 40%-45% of their semiconductor business.

2. semiconductor business is 80% of revenues.

3. dram was hurting txn last q.

now, 55-60% of txn's semi biz is not dsps. i'd bet that the majority of that is dram. do you have any sources that indicate differently? that leaves 30% or so of semi biz as dram - or about 25% of total revs as dram.

now, dram asps will be down about 25%+ from last q. next q will be another 15-25% down. this will hurt txn.

dsps are strong for now. dram is swirling in the toilet and i bet txn actually lost money on it last q - maybe lost a lot. the situation is much worse this q.

dsps better gow about 20%, q to q, if txn is to break even with last q - $1.07 from operations.

i think their is a high probability they don't do this and their forward statement is cautionary.

i think puts as insurance for long positions going into earnings may be advisable...
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