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Technology Stocks : Texas Instruments - Good buy now or should we wait?
TXN 176.16+1.0%3:59 PM EST
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To: bhuvanarama who wrote (1933)10/30/1997 8:25:00 AM
From: Charlie Smith  Read Replies (2) of 6180
 
b:

Several thoughts:

1. A 30 multiple is probably rich for a company growing at 20 percent, even with inflation at 2 percent. I think TXN can earn around $6 next year, so even at a 20 multiple the stock is cheap around $100.

2. Currency collapse in SE Asia helps on the cost side, but any earnings out of the DRAM JVs have to be repatriated, so the currency decline ends up hitting the equity line instead of reported earnings due to FASB rules.

3. Key questions at this point are: How much will demand from SE Asia slow due to higher interest rates/weaker economies? And have DRAM prices bottomed after a more than 90 percent decline? Semi industry forecast for 98 released yesterday says they have.

Regards
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