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Texas Instruments: Insight Into All Kinds Of Electronics

CNBC.com

Texas Instruments reports after the bell, and the company will be forced into Apple Inc.'s shadow, which might be a shame.

That's because this company could offer up some surprisingly good news, both in wireless and in flat TV's. The company is riding the consumer electronics wave and clearly, consumer electronics drove holiday shopping sales.

Yet, with all the worries about recession, TI could be in the cross-hairs when it comes to guidance. The company is in a great position for some perspective on smart-phones, big screen TVs, DVD players, even PCs. While Intel is the bellwether for all things PC, TI should give us a much broader insight into all kinds of electronics.

In fact, IDC says TI is still the number 1 chip vendor for cell phones, with 21.8 percent of the global cell phone market, ahead of Qualcomm's 19.2 percent and Freescale's 8.9 percent.

Analysts are looking for 52 cents a share on $3.58 billion. That follows the company's own guidance of 50 to 54 cents a share on between $3.5 billion and $3.66 billion. A year ago, TI posted 45 cents a share in earnings on $3.46 billion in revenue.

Cody Acree at Stifel Nicolaus tells me he isn't expecting anything different from what he heard from Intel and AMD. Both said no inventory problems and no collapse in orders, and he calls that "comforting." The fear was that both had seen market deterioration, but neither confirmed that, and electronics spending just about everywhere seems solid. The company isn't overly exposed to low-end, low-margin handsets in say, China, and still continues to take share from competitors.

The reason TI becomes such a compelling play is because of the market segments the company plays in. It's big on both the low-end handset sector where sales continue to blossom globally; and the company is a key player in smart-phones, still a tiny segment of the handset market but showing the biggest potential for global growth. Deutsche Bank's Ross Seymore wrote in a recent report that TI's analog business is also doing well, "relatively solid especially in peripherals (hard disk drives, printers) and battery management related to the PC end market."

That's some rosy stuff considering these shares are off 12 percent over the past three weeks. The sell-off comes amid concern by some analysts on the Street that TI is seeing some softness in handsets and deterioration in the high-end analog side of its business, not to mention new competition from Qualcomm and nVidia , now playing in some of TI's key segments.

And then of course, you've got a major sell-off in Motorola taking shape today with shares of the handset maker down 13 percent, a day ahead of the company's earnings. The concern follows Sprint-Nextel's news Friday that it lost more subscribers than expected on the quarter. That hurt Motorola, a major Sprint-Nextel supplier.

Charter Equity's John Dryden emailed me his thoughts on TI and they're much more optimistic compared to the naysayers, not worried he says about perceived losses in the wireless market, citing "excellent operational performance."

Yes, the folks on the Street I'm talking to are expecting a strong fourth quarter, based in no small measure to TI boosting its own outlook just a few weeks ago. The proof for investors will come from TI's guidance. Cody Acree is looking for a seasonal 4 percent to 6 percent decline in revenue, or $3.44 billion to $3.3 billion for its first quarter.

On the earnings side, a similar percentage decline. He's looking for a new range of 44 cents to 47 cents. And while TI's numbers might be overshadowed by Apple's news, these results are certainly worth close scrutiny by investors.

Questions? Comments? TechCheck@cnbc.com