Texas Instruments (TXN) lowers guidance - sell Nokia (NOK) too

Last night on their mid-quarter update, Texan indicated a major customer had cut back on orders last week. This makes some sense chronologically as just last week Rick Templeton spoke at conferences and sure didn't sound like he knew lower guidance was coming. It's a total surprise to them.

Texas Instruments has very elongated cycle moves. This is the beginning of the reduction in the growth and it likely telegraphs 2-3 quarters of slower growth going forward. Expect the bar to continue to fall. I'd stay short.

If they had said it was the aggregate Chinese market that slowed, I would have believed that too -- in fact, that shoe still has to drop. As they're blaming it on a single customer, though, that pretty much points to Nokia.

Nokia has tacked on multiple quarters of above industry growth rates by flooding the third world with low cost handsets and trades at a premium. It sounds like there's going to be a shortfall in the current quarter. Inventories at Nokia have been running somewhat above historical averages, so it's likely the slowdown is not a one quarter phenomenon.

I'd be shorting Nokia down 5% at $31.3 where it's trading now. This stock has been luring a lot of growth seeking money managers for a year now -- it'll take a while for them to get out of it.