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

To: John Chen who wrote (4117)	10/21/1998 9:28:00 PM
From: Danny Hayden	Respond to of 6180

Earnings RoundUp:TI posts last results including memory biz By Darrell Dunn Electronic Buyers' News (10/21/98, 12:00:18 PM EDT) Continued weakness in the semiconductor industry depressed Texas Instruments Inc.'s financial results, but since it bid adieu to its memory business in the quarter, the company should be able to focus almost exclusively on the fast-growing DSP market. The sale of the memory business to Micron Technology Inc., finalized on Sept. 30, was TI's last major piece of massive restructuring over the past two years. During that time, the company also exited the defense business, computers, and contract manufacturing. Excluding the effects of the memory business, TI reported net income of $267 million on revenue of $1.9 billion for the third quarter ended Sept. 30, compared with net income of $258 million on revenue of $2.1 billion in the third quarter of 1997. When including the memory business, TI reported net income of $164 million on revenue of $2.1 billion in the quarter, compared with net income of $239 million on revenue of $2.5 billion in the same period a year ago. “It was a very important quarter for us, because we completed the sale of memory business,” said William A. Aylesworth, treasurer and chief financial officer of TI. “This will be the last time we have operating results from memory, and that clearly shows we have transformed to a company that is really intensively focused on the DSP and analog markets.” Dan Scovel, an analyst at Fahnestock & Co. Inc., New York, said although the TI results reflected ongoing softness in the industry, the sale of the memory business continues to please the financial community. “The hole is very deep for DRAMs right now, and we don't see a whole lot of opportunity for profitability for DRAM companies for a least a couple more quarters,” he said. “But at TI, the slate is clean and it looks pretty darn good.”Although semiconductor revenue was down 8% from a year ago, sales were even with the second quarter of 1998, and orders were up 13% from a year ago and 8% from the second quarter. “DSP revenue growth was about 17% in the quarter during a pretty poor market overall,” Aylesworth said. “We're clearly continuing to outperform the total DSP market ... and it's become clear that DSP will be about the fastest growing sector of the market in 1998, and likely again in 1999.” As part of the agreement with Micron, TI committed to loan Micron $750 million to help it install its own equipment in the newly acquired facilities. TI will become Micron's largest shareholder, with about 12% of the company's common stock. As a result, in the third quarter, TI paid $550 million to Micron in exchange for Micron stock. Despite this, TI ended the quarter with cash and cash equivalents of $2.1 billion. TI has completed nine acquisitions over the past two years, and analysts say it is likely additional moves are pending. “But I don't think it's burning a hole in their pocket at this point,” Scovel said. “It is a fair amount of cash to pack around, but considering the state of the semiconductor market, it's nice to have those kinds of assets on hand.” For the first three quarters of 1998, including results from its memory business, TI has reported net income of $218 million on revenue of $6.5 billion, as compared to net income of $2.1 billion on revenue of $7.3 billion through the first three quarters of 1997.