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

To: DJBEINO who wrote (3807)	6/19/1998 11:30:00 AM
From: SteveG	Read Replies (1) \| Respond to of 6180

(sorry, duped report) <A> Standard & Poor's Revises Texas Instruments' Outlook to Negative, Affirms Ratings NEW YORK -- Standard & Poor's today revised Texas Instruments Inc.'s (TI) outlook to negative from stable. Ratings for the company are affirmed as listed below. TI today announced the sale of its memory business to Micron Technology Inc. for 28.9 million Micron shares (currently about $600 million), $950 million of notes from Micron, and Micron's assumption of $190 million of debt. TI will also help fund Micron's technology transition at these fabs with $750 million of cash. Also, TI will record significant charges related to both this transaction and a restructuring to reduce headcount by 3,500 people. Liquidity will remain adequate, although reduced by the cash portion of the restructuring charges and by the $750 million of cash in the transaction. TI's memory business lost over $100 million in the first quarter and has a run rate of under $1 billion of revenues. Although this transaction will remove future losses from this currently pressured business from TI's reported earnings, over the near term, Standard & Poor's views the transaction as a shift from direct participation in the memory business to indirect participation, via its significant Micron stock position and notes. Micron currently has a corporate credit rating of double-'B', and ratings were previously listed on CreditWatch with negative implications due to earnings pressures in its memory and PC businesses. However, longer term, the transaction can remove much of TI's exposure to the volatile memory business as the Micron notes are repaid. The ratings reflect Texas Instruments Inc.'s good position and solid technology base in the cyclical semiconductor industry and its conservative financial practices. TI provides digital signal processors, analog devices, and a broad range of other chips. The company enjoys a substantial royalty stream from its technology patents. TI has continued to reduce its exposure to dynamic memory chips and is expanding its presence in noncommodity segments, including the growing digital signal processor sector. TI's balance sheet was materially strengthened by the sale of its defense operations to Raytheon Co. in mid-1997; cash balances were $2.4 billion at March 31, 1998, while total debt was about $1.4 billion. After the transaction, TI will still have significant liquidity, supporting its 'A-1' commercial paper rating. TI's net debt level is likely to increase in time, since Standard & Poor's believes the company's planned semiconductor expansion will likely entail long-term expenditures in excess of internal funds-generating capability, but capitalization is still expected to remain quite conservative. OUTLOOK: NEGATIVE Texas Instrument's financial flexibility will be reduced somewhat by the cash impact of the pending restructuring and the transaction with Micron. Additionally, TI's remaining semiconductor business will be pressured by weak chip industry conditions in many sectors through 1998. Also, TI will have a significant investment in Micron, which currently is experiencing losses due to poor memory and PC market conditions, which should continue over the near to medium term. -- CreditWire RATINGS AFFIRMED Texas Instruments Inc. Corp credit rtg A Sr unsecd debt A Sub debt A- CP A-1 ============= Many brokerage research seemed to view it favorably.