Bob, I think what happened yesterday is mostly a function of the EU looking like it is at least trying hard to avoid a breakup and meltdown. Stocks are priced for a recession. Or, if not for an outright recession, at least for very, very slow growth. And companies are staffed for it too, which is why unemployment remains so high, profits remain on the whole pretty good (with notable exceptions in the financial and housing-related sectors) and companies keep socking away cash on their balance sheet. In their call on Thursday, TXN said that they believe that we are scraping along the bottom and that they are under-shipping real demand:
And I think its tied somewhat back to the question Uche asked me if I haven't gone through specifically, which is do we still believe that we're in this bottoming process in the downturn, and the answer is we do. What we look at, first of all, the inventory levels of TI just as customers and distributors are now very low, and as I said it before, we believe we're undershipping demand. So just to reiterate, at some point, customers will have to stop reducing inventory. And when that happens, our revenue will grow as our shipments increase to match the customers' production level even if there's no growth in end demand or replenishment of inventory. And for anybody that's watched this industry cycle over the course of time, you fully understand that once you start to get in that process and customers regain confidence in their own outlook, the next phase is they will typically then layer in addition inventory as well. The customers historically have not forecast these snapback from their demand, and instead, they rely on short product lead times to support their increased demand. We think we are very well positioned both with our inventory, as well as our short lead times to support that inevitable increase in demand. And the other thing that I would point to, which I had mentioned earlier, is just the stability you might say in terms of the orders took a step down in the month of July, but they generally been flattish since that time, which is to us indicative of a bottoming process as well.
If we can add to the current economic mix confidence that the financial sector won't implode again and that the EU and the US will adopt sane economic policies and regulations, then we could well see the market explode upward. And even see employment numbers rise much more than they have, finally making a dent in all those numbers of unemployed people. Of course, those are big "if"s.
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