Larry, IMHO the excerpt on Reuters shows the reasoning powers of a certain Rodman with a changeable hair-color...hair colors..whatever <g>
"Because 3Com/US Robotics is Texas Instruments's largest
DSP (digital signal processor) customer, we are concerned about
the recent slowdown in that company's modem sales," Rodman said
in a report
Fine. That's a fair statement, and ADI's PR on supplying COMS w/ DSP's isn't something TI wants to cheer about.
"Modem sales may be slowing because of a lack of
industry standards and competition from new technologies
(possibly much faster cable modems)," Rodman said.
Well butter by biscuits, because I could have sworn the 12/1 issue of Barron's had a piece on COMS in which it made a very bullish case for cable modems, specifically COMS' cable modems. According to the piece, cable modems "should start appearing on the shelves of computer retailers in the second half of 1998. The new modems will be made by 3Com as well as MOT, Samsung, Sony and Matsushita's Panasonic unit."
So if the argument is that cable modems will substantially canibalize existing modem sales for FY'98 (re: TI), it's weak. The argument's made weaker by the fact that they may be picking up some sales on the cable modems themselves and also the fact that "the spread of cable modems will also prod cable TV operators to buy more networking gear, and those purchases should benefit 3Com, BAY and CSCO."
Also, what about the potential for the "competing industry standards" issue to disappear?
Regardless, this slowdown will most likely result in a
slowing of orders and shipments for DSP products, which account
for approximately 20 percent of (Texas Instruments's) sales in
the fourth quarter.
Okay, 1997 goes from 2.08 to 2.00, so basically your chopping .08 off of 4Q'97. Fine.
But the 1998 estimate goes down 20% on the worry over COMS? Is there the possibility that whatever "inventory correction" COMS is undertaking will not take the entire FY'98? Or is there some kind of assumption that their modem sales are going in the tank?
20% of TI revs are DSP's, but not DSP's to COMS right? And forget revs., what about earnings? Do 20% of TI's earnings come from sales of DSP's to COMS?
I'm not even in TI. Like a lot of analyst commentary, just rubbed me the wrong way...and you know what a "fan" I am of those characters <g>
Anyway, FWIW it's probably very important to try and get a handle on the ramifications of the ADI news. IMHO, that's a lot more important that what some blowhard analyst has to say.
Good trading,
Tom |
