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Texas Instruments Inc. Message Board

  • ybelfor ybelfor Jan 17, 2003 10:39 AM Flag

    Please comment on "MULTEX" article

    Don�t mess with Texas (Instruments) 2003-01-17

    The chip giant is hibernating in this tech winter, but should be a resurgent beast in the coming thaw.

    Over the last 70 years, Texas Instruments (TXN) has seen plenty of economic cycles. The company has a knack of hunkering down through the lean years, only to emerge stronger when the economy turns up.

    History may be repeating itself: The company's sales have risen for four straight quarters, and should rise even higher when the economic rebound finally takes root.

    Texas Instruments is especially well-positioned to benefit from the technological changes afoot in society, as CEO Tom Engibous noted at a recent consumer-electronics show.

    It will be a while before TI can again take home the $1.71 a share profit that it earned in the boom of 2000. But investors just want to see a bottom line that is growing.

    After losing money in 2001, TI likely earned $0.19 a share in 2002, according to consensus forecasts. And profits are expected to rise more than 50 percent in 2003-even as the economy remains weak. A brighter economic outlook could lead to a sharply higher earnings trajectory in ensuing years.

    But investors remain myopic. After falling roughly 4 percent on Thursday, shares of TI remain just above their four-year low.

    For those with patience and foresight, the weak stock price should be quite enticing. After all, it's quite rare-and inexplicable-that you'll find the stock selling below the competition on the basis of price/sales, price/book, and price/cash flow. That discount simply appears unwarranted. At a minimum, it means that shares of TI don't have as far to fall if the sector weakens anew. And at a maximum, shares of TI are poised to rise more sharply in an industry upturn.

    Dave Sterman is the Director of Research of Chelsea Research and a financial commentator for various news outlets.

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