Texas Instruments 1Q:2008 Preview

Texan already lowered guidance at the mid-quarter update for the current quarter. That won't stop them from guiding to below consensus for next quarter. Analog is probably fine. Wireless and DLP are where the problems lie. Wireless is about 35% of business and there's a widespread inventory correction going on. Texas Instruments has only recently become aware of this weakness. As I have said before, Texan has laggy vision with regard to wireless business trends – they sell into a distribution channel which sells into an OEM channel which sells into the wireless carrier channel which sells to an end user. They're very removed from the current state of business as a result. DLP revenues are also subject to a downward revision as they're losing the digital TV battle to LCD and plasma.

Expect to see wireless guidance come down roughly 5-10% relative to consensus and DLP weaker which should bring the overall top line guidance in with a midpoint of $3.3 bil – I'm figuring a range of $3.175 - $3.425 bil for the quarter – the street is at roughly 3.45 bil for next quarter. Gross margins should remain roughly flat at 53.5%. I'm thinking EPS guidance will be about 40-44 cents which is below the consensus of 48 cents.

The unfortunate thing is the street is also cautious and I'm not sure how that will play into the stock reaction. I remain negative but I have no position in Texas Instruments at present. I may be short by the end of the day. We'll see.