| Tech Stock News and Analysis |
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| Monday, October 23, 2006 |
Mobile phone chip maker Texas Instruments Inc. reports third-quarter earnings on Monday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Analysts are betting that solid sales of mobile phones will help Texas Instruments deliver a strong third quarter, but concern has cropped up that the company could be in for a soft fourth quarter.
Cell phone maker Nokia Corp., which is one of Texas Instrument's largest customers, said on Thursday sales of low-priced handsets ate away at third-quarter margins.
The company also said that although it expects the value of the global mobile market to grow, it believes the average selling price of mobile phones will continue to decline.
BY THE NUMBERS: Analysts polled by Thomson Financial expect the company to report, on average, earnings of 45 cents per share on $3.8 billion in revenue.
The company narrowed its third-quarter outlook in September, when it said it expects a quarterly profit between 44 cents and 46 cents per share from continuing operations, compared with previous guidance of 42 cents to 48 cents.
TI also narrowed its revenue forecast to between $3.71 billion and $3.87 billion, sharpened from a previous forecast for $3.63 billion to $3.95 billion.
ANALYST TAKE: UBS analyst Uche Orji, who has a "Buy" rating on the stock, wrote in a client note that although the company may be able to grow both market share and gross margins over 2007, in the near-term, he thinks an inventory correction and a transition to low-end handset sales could put the company in a pinch.
Deutsche Bank analyst Ross Seymore, who has a "Buy" rating on the stock, thinks Texas Instruments will meet the Street's estimates, but is predicting weak fourth-quarter guidance.
"The company will likely not be immune to recent softness in analog sales, and comments from Nokia about soft 3G market in Europe could offset gains from new entry-level products," said Seymore, in a note to clients. "While fourth-quarter guidance may be cautious, we believe Texas Instrument's valuation remains attractive."
STOCK PERFORMANCE: Shares of Texas Instruments tumbled at the start of the quarter and hit a 52-week low of $26.77 on July 21, then shot up more than 25 percent in the following weeks to reach $33.89 on Sept. 28. The final trading day of the period, shares gave up nearly 2 percent of that gain, to end at $33.25.
The stock closed Friday at $31.37 on the New York Stock Exchange. |
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