Brandon,
I've owned some TI stock for the last 5 years or so, however I only
bought in heavily last summer which was bad timing needless to say. At the low point in early 1996 I think I was down around 40%, however I've continued to accumulate shares and finally my portfolio is looking halfway descent again. At the time of my original post I was looking to move some investments around; I ended up selling about 20% of my TI at just over $50 and bought AMAT at $35 and change. Both have went up since then so the decision to redistribute hasn't had a great impact yet but at least I'm a little more diversified.
I'm not at all nervous about the future of TI and I love the future outlook although I must confess I'm a TI employee so my view is probably somewhat biased. I have confidence in the management of TI.
Let's face it if anyone can play the high-tech game successfully it's Jerry Junkins. His track record is impressive to say the least and he's got a lot of incentive to grow this company (a few million shares of incentive). Obviously I have to be careful of what I post here as
I cannot reveal inside information, however I can tell you that TI has a very aggressive company-wide growth plan/vision in place that would
ake it a 50+ billion dollar over the next 8 years. Will this happen? Who knows for sure but if you don't strive for it there's no chance of it occurring. Management also looks at key financial indicators on a regular basis, such as RONA, Net profit margin, ROE, etc as well as growth. This is comforting to know that management is aware of and gets compensated based on the very factors that drive stock price in the long run.
You're right that the market still sees TI as only a DRAM maker instead of a well diversified corporation. Even it's DRAM business is protected against total disaster by joint ventures. If DRAM prices fall another 50% at least TI will still be in business and worst case breaking even unlike Micron which would be having a yard sale. I'm not extremely excited about this year either. I still think the stock will bounce around between the high 40's and mid 60's. If everything turns positive we could see 75 or 80 this year but I seriously doubt it. However like you, I'm looking out 4 to 6 years, and I firmly believe that we're looking at $125 to $200/share in that timeframe.
I wouldn't worry too much about the royalty stuff. I think it will play itself out in time. I think the settlement will be close to what we've received in the past from Samsung. I think we'll make some money in this if we're patient, however there are sure to be alot of ups and downs in the meantime.
Since you're expertise is in the area of DSP's you should consider applying for a position at TI. I actually work in the area of Defense, however I'm sure we'll be hiring alot of new talent for the DSP R&D center that's under construction.
Best Regards,
JP
P.S. How do you think AMAT's earnings will be? I think they'll exceed expectations. Hopefully they will make a run. I think they're undervalued. Could we see them in the 60's this year?
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