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Wednesday, January 23, 2008

Texas Instruments 4Q:2007 Results

Despite concerns of a slowing market, Texas Instruments managed to get close enough to the consensus that the stock didn't fall apart. Their guidance is good considering it seems to be a foregone conclusion that companies will guide down and they didn't. They're gaining share and that's helping.

My experience with this company is they're a slow boat -- it takes a long time for their business to turn in either direction. They're very channel dependent -- cell phones, the bulk of their sales, don't sell directly through to an end user. When Texan books a wireless sale, it goes into the vast EMS chain. Next it's assembled into an OEMs product. Then it's shipped into a wireless carrier's inventory. Ultimately, it emerges in the hands of a wireless user when they buy a phone. This process can take months. Theoretically, it would be very difficult to keep track of one's channel inventory with the parts passing through so many hands.

Texan doesn't see inventory issues or a fall-off in consumer demand. They wouldn't... yet. Give them a few months.

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