Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Charlie Smith who wrote (1932)	10/29/1997 7:37:00 PM
From: bhuvanarama	Read Replies (3) \| Respond to of 6180

Any thought on this from investor.msn.com I hope this price might be possible over next few weeks. It would present a great buying opportunity. Jubak's Journal Itching at the Trigger I'm not sure that fundamentals matter in a market like this. But I'll take a whack at them anyway. As I write this, Texas Instruments (TXN) is down to $103 a share -- that's a decline of $35 a share since Oct. 10. The stock has lost $6.8 billion in market value in less than three weeks. That's despite delivering a 7% positive earnings surprise and announcing a 2-for-1 stock split. The ostensible problem is Asia. Every investor who knows a DRAM from a damn -- and some who don't -- believes that memory-chip prices are headed downward as hard-pressed Asian chip makers cut prices. That thinking got big-time support when a Texas Instruments/Acer joint venture in Taiwan announced that it now forecasts a loss of 1.9 billion Taiwan dollars in 1997 due to slumping chip prices. Figuring out the effect of all this on Texas Instruments is pretty difficult. (Which is probably part of the problem. Who's got time to do a careful analysis when the sky is falling around you? Sell and be safe.) About 84% of the company's sales come from semiconductors, but memory chips account for just 20% of that. How much will that cut into the company's margins and sales? Texas Instruments operates 10 plants in Asia (five of those are joint ventures) -- so the company should get some benefit from falling currencies, but it's safe to say that the memory division won't make money. Earnings for the quarter that ended in September were $1.20 a share. If they stay flat at that level, with growth in the digital-processing business offsetting shortfalls in memory chips, the company will finish 1997 with $4 a share in earnings. It's hard for me to see that the dominant digital-processing company in the world is worth less than a multiple of 30 -- but, hey, the stock is already at $103. The charts tell me that it could go as low as $85 -- the price the stock commanded on June 30. For what it's worth, I bought more at $110, but I haven't been buying at $103. This doesn't feel like a bottom on the stock to me.