And you thought with last week's earnings warning from Advanced Micro Devices and the mixed financial bag from National Semiconductor that we'd be done with chips for awhile.
We get the mid-quarter call from Texas Instruments after the bell Monday, and that's a key call from a growing bellwether in technology. This isn't just about chips, but also a referendum on cell phones and flat-panel TVs, the two key sectors in which the company plays.
The simple part of the equation are the numbers: The company already providing a range of $3.01 to $3.28 billion and 28 cents to 34 cents a share in earnings.
But there's a wide range of expectations on the Street which is pretty unusual. Goldman Sachs and Jefferies both expect the company to narrow its range toward the high end of expectations. But Banc of America says the ongoing inventory issues facing TI's customers, and TI itself will force the company to narrow toward the lower end.
That'd be bad news for a company that's been lumbering along.
But both Jefferies' John Lau, and American Technology Research's Doug Freedman say there are signs of optimism, and reason for investors to give this company a second look.
Lau expects $3.18 billion, down about 8% quarter to quarter when the Street is expecting a 9% drop in revenue. He's more optimistic than the Street consensus because data points, he says, continue to improve across the analog chip sector. Linear Technology , Maxim Integrated Products , Intersil , all of the major analog companies reported significantly lower revenue on slacking consumer demand. Companies guided down on average 5 - 7%. But then, in January, Analog Devices guided down flat to 3%, which indicates an improving climate. National Semiconductor is guiding its revenue sequentially higher.
Since Texas Instruments is such a key analog player, Lau's reasoning is that the company may surprise investors today, and in a good way.
"I think you want to get in, I think this is the right time, especially for an analog company becasue we are seeing the recovery initiatlly in the analog sector, and then continuing to improve for the consumer names in the second half of the year," says Lau. "With 40% of their revenue in high performance analog, Texas Instruments is in very good position."
Doug Freedman also remains optimistic. Analog had always traditionally been a strong sector at the beginning of the year because of industrial customers and their buying habits. But with strength in portable devices like music players and cameras -- where analog chips are so critical -- that investors may see strength that stretches through to the third and fourth quarters of a calendar year, now that analog is seeing nice pops in both industrial and consumer customers.
"There's an expectation out there that all of analog will benefit from all those trends," says Freedman. "I think there are a handful of analog plays that will benefit from that and others will not, so picking the right ones in the analog space will be very important in the analog space."
Easier said than done. Prudential is out with a note today about Advanced Micro Devices saying handset sales are weakening around the world, flat-panel TV prices are starting to level off, and Vista isn't providing nearly the boost experts had anticipated in the PC industry. That would suggest that AMD's problems announced last week may not simply be its own. Which means while there's a big focus on TI's mid-quarter call today, there will be HUGE interest when Intel does the same thing April 17th.
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