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To: AnnieO who wrote (93966)	4/18/2000 1:58:00 PM
From: puborectalis	Respond to of 120523

MotleyFool.com - Fool Plate Special Texas Instruments Conducting Well By Brian Lund Do you think that broadband Internet connectivity and wireless communications are industries with great growth prospects? Neither do I. No, just kidding -- I do, actually. That's why I quit slouching and take notice when Texas Instruments (NYSE: TXN - news) issues its quarterly earnings. The leading manufacturer of digital signal processors (DSPs) and analog semiconductors relayed results for the first quarter last night. The semiconductor division saw revenues rise 30% year-over-year. DSP revenue soared 50% above last year's first-quarter mark. Total revenues were up 27% to $2.7 billion for the quarter. Net income (once you brush aside amortization and acquisition charges) rocketed 69% higher to $470 million, producing a $0.55 EPS, beating estimates by two cents. Those of you keeping score, however, may want to note that Texas Instruments' (TI) income from investments was an unusually high $105 million this quarter, due to some unanticipated divestitures. The extra $25 million over last year's quarterly average amounts to about $0.02 extra in EPS. TI has three main operating divisions: semiconductor, materials & controls (M&C), and educational & productivity solutions (E&PS). M&C, which manufactures traditional electro-mechanical devices, saw revenues grow 18% to $290 million this quarter, driven primarily by automotive sensors. E&PS, whose $87 million in Q1 revenues consisted mainly of calculator sales, punched in an 8% gain. Let's see... $2.7 billion in total revenue, minus $377 million for the M&C and E&PS divisions... that leaves, well, a whole lot for the semiconductor division. This unit -- which manufactures chips that are used in a wide variety of applications, including cell phones, computer modems, and hard disk drives -- produced about 86% of TI's revenue this quarter. That percentage of total revenues keeps growing and growing: Semi M&C E&PS Other 1996 50% 10% 5% 35% 1997 74 10 5 12 1998 74 11 5 9 1999 82 10 5 2 2000 Q1 86 11 3 nm What's more, TI's market leadership is expanding. The company's market share in DSP has grown from an estimated 45% last summer to 48% this quarter. In the analog space, where TI gained only 25% this quarter due to weakness in the hard disk and notebook computer segments, TI is the only major supplier to gain share in each of the last four years. But that's the past. Let's talk about the future. This quarter, TI announced two significant new DSP cores that the company thinks will cement its leadership position in the industry: The C64x is reported to operate at 1.1 gigahertz, 10 times better than today's performance leader. It purportedly can compute almost 9 billion instructions per second, making it ideal for infrastructure applications such as cable and digital subscriber line (DSL) access. The C55x is supposed to be the most efficient programmable DSP developed to date, requiring only one-sixth the power of current low-power DSPs, but delivers five times its predecessor's processing power. That makes the C55x ideal for mobile devices. An additional beauty of these new cores is that they are backward compatible, meaning that they can fit into existing architecture with minimal redesign. That saves time and money. Cisco (Nasdaq: CSCO - news), Ericcson (Nasdaq: ERICY - news), and Nokia (NYSE: NOK - news) have already started designing with these new cores. TI is a company that sees its future and will be its future. Margins are improving, demand is increasing, price pressures are not pressing. Now one has only to decide if TI is worth the cost. What price would you pay for market dominance in a growing sector? That's for you to decide, my investing friend.