CNBC had a mention about TXN...
Said the news is carrying over to all semi's.
Came in on the end of it so I missed the details.
TXN is down 11.
Ah, here it is.
Trouble in Texas. (stock value for computer chip maker Texas Instruments look bleak as licensing agreements with Asian countries expire)(Brief Article)
Michael Noer
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07/29/96
Forbes
Page 96
COPYRIGHT 1996 Forbes Inc.
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LAST YEAR when we spoke to Richard Whittington, Soundview Financial's influential semiconductor analyst, he was bullish on chip stocks (Forbes, June 19, 1995). Good call: They rose 14% last summer, before he put a "hold" on them in October.
With semiconductor stocks down 31% since then, is it time to bottom fish? No, says Whittington. The current glut in chip supply should last into 1997, keeping chip stocks under pressure for the rest of the year.
One semiconductor stock Whittington thinks has further to fall is $13.1 billion (sales) Texas Instruments ( txn ). At a recent 49 3/8, the nyse stock is down 30% in the last year and trades at nine times 1995 earnings. Even so, he thinks it's a short. Whittington points to rival Micron Technology's (mu) share price; off 58% in the same period, mu sells at just six times 1995 profits.
One reason txn shares have held up: Its 16MB memory chips are selling like hotcakes. But there's trouble ahead: 50% of txn 's 1995 profits came from licensing agreements, mostly with large Asian chipmakers like Samsung. Most of these contracts expired in January and a dozen or so Asian manufacturers, led by Samsung, have not renewed their contracts.
TXN is already feeling the pinch. Royalty income was $100 million of pretax income in the first quarter, versus $200 million in 1995. Whittington predicts txn will fall to 40 in the next 12 months. |
