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Technology Stocks : Texas Instruments - Good buy now or should we wait? -- Ignore unavailable to you. Want to Upgrade?

To: Charlie Smith who wrote (4567)	7/20/1999 6:20:00 PM
From: Patriarch	Read Replies (2) \| Respond to of 6180

A very excellent quarter to say the least Charlie. I took the liberty to post the article below and highlight the major points of interest. IMO, today's 9 point drop was not a commentary on TXN, just the market as a whole. --------------- Texas Instruments Q2 earnings up sharply July 20, 1999 03:46 PM By Marcus Kabel DALLAS, July 20 (Reuters) - Texas Instruments TXN , riding a wave of demand for high tech communications using its semiconductors, said Tuesday that second quarter net earnings jumped to $325.0 million, or 83 cents per share, from $43 million or 11 cents a year earlier. Excluding special charges, TI's earnings per share were 92 cents, beating Wall Street estimates of 86 cents as compiled by financial analysis group First Call. Earnings were $372 million, excluding charges, as against $142 million in the second quarter of 1998, "primarily due to the absence of losses from the divested memory business and also increased profits in semiconductors," the company said. TI sold its computer memory (DRAM) chip business to Micron Technology Inc. MU in the third quarter of 1998 as part of restructuring to focus on semiconductors for voice and data communications, including wireless phones and computer modems. [Pat's note: In retrospect, this was the impetus that got the TXN ball rolling] As a result it has returned to high growth rates fueled by demand for products using its Digital Signal Processors (DSPs), widely used in mobile telephones and other voice communications, and analog chips, which convert real-world information into digital form that computers understand. "We're very pleased with these results and think they are evidence of the progress we're making," Chief Financial Officer Bill Aylesworth told Reuters by telephone. TI also poured on the growth in sales and margins when compared with the first quarter, a more accurate reflection of the company's new structure. Revenues of $2.35 billion were up only 8 percent from a year ago, before the DRAM division was sold, but rose 15 percent from the first quarter's $2.04 billion. Operating margins rose 5.5 percentage points from the first quarter to 21.4 percent, more than double the year-ago rate. Aylesworth said about half the margin increase from the previous quarter stemmed from catch-up royalties of $85 million from South Korea's Hyundai Electronics Industries, part of a cross-licensing deal signed after TI pressed a patent infringement lawsuit. The Hyundai payment added 12 cents to earnings per share. The other half of the margin growth came from ongoing efforts by TI to use capacity efficiently, hold costs flat and boost revenues, Aylesworth said. Aylesworth said the pace of sales growth in TI's core semiconductor products will continue rising in the second half of 1999. Revenues from DSP, which rose 16 percent year-on-year in the first quarter, were up 23 percent in the second quarter, while analog sales, which were flat in the first three months of this year, grew 14 percent in the second quarter. "We think that growth (in DSP and analog) will accelerate," Aylesworth said. "A measure of that I think is if you look at our order rates in semiconductors in the second quarter. Orders were up 46 percent compared to the second quarter a year ago and those increases are heavily in the area of DSP and analog," he said. Revenues typically lag orders by about one quarter, he said. TI, whose DSPs are used in an estimated two out of three digital cell phones on the market, also made two acquisitions in the second quarter aimed at securing a similar major role in the emerging market for high capacity broadband communications. It acquired Telogy Networks, which makes software for voice communications over the Internet, and Libit Signal Processing Ltd, which makes chip sets for cable modems. ((Dallas newsroom, 972 980 4192, fax 972 233 3165)) REUTERS