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

To: robert w fain who wrote (2331)	12/4/1997 2:09:00 PM
From: Charlie Smith	Respond to of 6180

Bob: See the following for more on COMS/TXN Message 2877423

To: robert w fain who wrote (2331)	12/4/1997 2:43:00 PM
From: Bilow	Read Replies (2) \| Respond to of 6180

Re: 3com considers TI as their #1 DSP developer and supplier for the past ,present and future I agree, though I am not really in a position to know what 3COM plans. But the relationship between a supplier and a user is at least partly a zero sum game. The way that a user gets a price break is by demonstrating that he is capable of replacing the supplier. That is what 3COM appears to be doing, and this is only rational behaviour on the part of a customer. Having been at companies that used large quantities of integrated circuits, I have participated in these sorts of things. They are not necessarily indicative of a change of vendor, but they are indicative of an insistence on commodity pricing. So there is no contradiction between the news releases. But 3COM will get commodity level pricing on their large volume purchases. The engineering effort is negligible compared to a 10 cent price difference between suppliers. This is what drives commodity pricing in volume DSP applications. Another thing I should mention is that as an engineer, when times are good, you develop new products, and these are quite likely to use generic DSPs like the ones TXN sells. When times are bad, prices drop and management asks you to instead cost reduce what you are already producing. If the economy slows down next year, you will see pricing pressures on DSPs from TXN (and everybody else) as engineeers get diverted from new product development to cost reducing old products. I don't have any positions on TXN right now, and don't really have the time to post regularly to this thread like I did when I was short. So bye for now guys, and watch out for the (tech) bear. :) I wouldn't sell TXN short at its current lower price. (Do you remember when the longs were telling me that the stock would be at $100 post split?) At the same time, I don't think that TXN is the cheapest, best value stock available in the entire stock market, which is how I try to pick my longs. If the stock drops below $20, I would start to get interested, but that move would probably be associated with other stocks making even more attractive P/Es. Which reminds me of a thought I had about your position, which is to play only one stock. This places you in the position of being essentially a permanent amateur market maker in the stock. The difference between the real market makers and you is that they buy and sell a lot more frequently, and they don't really care about the fundamentals most of the time, but when news comes out, they don't look at it through rose-colored glasses. So when TXN had the good earnings come out that hid a reduction in sales, they saw through it and sold at $71 (post split). If you want to make a market in TXN, you are going to have to go with the trends. I also suggest ignoring everything that their management has to say, it is clear that their interests are not identical with yours, and that they will take care of themselves before they take care of you. -- Carl