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

To: tbuff who wrote (1847)	10/23/1997 4:35:00 PM
From: ABC FINANCIAL	Read Replies (1) \| Respond to of 6180

TI CEO TO SPEAK If you are in the Dallas area, take the opportunity to visit with TI's CEO. BILOW, if you like make a list of statements about why TI will not reach the 20% GROWTH and 20% PROFIT FROM OPERATIONS. I will give them to Tom and let you know his response. Keynote Speaker: Tom Engibous Topic: TI Growth in Asia Pacific Region Place: Harvey Hotel, Trinity Room -- Plano Date: November 4th 1997 Registration: 5:00-5:30 pm

To: tbuff who wrote (1847)	10/23/1997 5:14:00 PM
From: Bilow	Read Replies (1) \| Respond to of 6180

Hi Richard, Yeah, I bought CUBE at an average price of $19.81, and it is currently around $30. I sold my CUBE months ago, but I think it is still a reasonable buy at $30, compared to TXN. Note that CUBE is a young, high growth, high tech stock, while TXN is an old, slow growth, high tech stock. They shouldn't carry similar PEs or P/Ss, as their growth rates are not at all similar. Here are the sales figures per share for the two stocks and Intel (INTC) for the last five years. Look at the numbers. It is clear what the difference is between a mature, slow growth stock and a growth stock: Sales per Share per Year Year TXN CUBE INTC ---- ----- ---- ----- 1992 $42.67 $ .35 $ 6.79 1993 46.92 .80 10.03 1994 55.65 1.32 13.19 1995 69.27 3.56 18.33 1996 61.57 9.42 23.48 4-year annualized growth rates 92-96: TXN 9.60% CUBE 127.77% INTC 36.37% Note that the published TXN number for 1996 is lower than what I have used. In order to be completely fair, I added back in the discontinued operations number for that year. This makes the TXN numbers comparable for 1992-1996. This slow TXN growth is not a phenomenon of the last 5 years. It has been this way since before "ABC FINANCIAL" was old enough to drive. So TXN has only a promise of growth in the future, it has not delivered in the past. Lets look at growth rates for the present, revenues in 1996 and 1997 so far: (Remember, none of the discontinued businesses are included in these figures.) In order to illustrate what a 20% growth stock would have in quarterly sales given TXN's 1996 sales, I've included a third column with figures 20% larger than the 1996 figures. The 20% figure is the one you hear TI talking about all the time: TXN Revenues 1996 1997 So Far 20% growth Q1 $2675M $2264M $3210M Q2 2399M 2559M 2878M Q3 2407M 2500M 2888M Q4 2459M 2951M You can see that they aren't doing too well in 1997 compared to the 20% growth target. In fact, 1997 revenues are only up by 2.16% so far over corresponding quarter revenues in 1996. They are missing their targets. If they did hit their target of 20% growth, a reasonable PE would be about 20, not the current high multiple. But they aren't growing at 20%. Of course TI will tell you that the reason you should ignore this historical, factual data is that DSPs are going to make them grow in the future. That is why most of my posts have concentrated on the DSP story. And the DSP growth story doesn't look very pretty. Note that ABC still hasn't put up the "correct" figures for DSP sales over the last four quarters. If he does, you will find that his figures show worse growth than mine. I am an engineer. I always build margins into my calculations, and I over-estimated the DSP growth rate figures in my post of the other night by under-estimating DSP sales for the early quarters. Or perhaps I am wrong. How's about it ABC? Get Tom to give out his DSP sales figures for the last four quarters. Note that my position as a design engineer gives me insight into TI's market that members of the financial community or general public simply cannot achieve. I am TI's market, and customers can/will always tell you more about a company than the company itself, and they will give you a fairer estimate than the company's competitors. -- Carl