TI - Suggested position -
own the stock
| 5 yr Revenue Growth |
-4.6% (CAGR) |
| 5 yr Earnings Growth |
9.0% (CAGR) |
| PS (Sales/Share
/ Price) |
~13.2 |
| PE |
~89 |
| EPS TTM |
$1.68 |
|
Stock Price
|
| 1/14/2000 |
$110.875 |
| 2/2/2000 |
$119.375 |
| 2/22/2000 |
$149.00 |
| My estimated price per
share. |
$120 to 140 |
Results over the past 3 years
|
$M |
12/31/97 |
12/31/98 |
12/31/99 |
Growth Rate (97
to 99) |
| Revenue |
9,750 |
8,460 |
9,468 |
-1.5% |
| Net Earnings |
302 |
407 |
1,406 |
215% |
| Margins |
3.1% |
4.8% |
14.9% |
|
Business Outlook: Texas Instruments is now focused on high growth
markets and is a leader in supplying chips for these markets. This should
result in TI's revenue and earnings growth rates rapidly growing. TI is a company that has been
continually redefining itself in the semiconductor industry over the past
years. Currently TI is a couple years into transforming itself into a
business tightly focus on Digital Signal Processing (DSP) chips and analog chips. TI sells the
key chips that
are used to build wireless phones, DSL modems, consumer devices, hard disk
controllers and they have business units focused on education
(calculators) as well as projector display units. TI is the largest maker
of DSP chips.
The DSP market is estimated to be growing by 25% per
year according to Forward Concepts. Dataquest is estimated that analog
chips are also growing at 16% a year. The wireless phone market is
estimated to be growing at about a 70% growth rate by industry sources and
the major limits be faced is shortages of components.
In 1998 TI shipped 100 million DSPs into the
wireless markets. TI is expecting that digital wireless phones will grow
from 153 million (1998) to 230 million (1999). Wireless phones are
consumable product category and it seems that many people replace their
wireless phone every 2 or 3 years as they change services or get a phone
with the latest features. TI management believes they are gaining market
share in the DSP business.
2/22/2000 - TI introduced two new DSPs. They added a
new chip, the C64 to the flagship C6x family. This chip is 10 times faster
than the C62 (introduced in 1997). They also introduced a new member of
the C5x family, the C55. This chip consumes 6 times less power per unit of
processing power, than its predecessor. Battery powered devices using this
chip will be able to operate longer than previous chip technologies would
have allowed. The new chips are software compatible with previous family
members, which will help users design them into new products. The C64 is
expected to be widely used in wireless phones and the C55 is expected to
be designed into consumer portable audio products like MP3 players.
Sales of DSP chips for consumer devices (e.g. MP3
players, cameras, broadband modems) grew by 37% in the last quarter. In
2000 TI is planning to spend some $2B to upgrade and expand its chip
manufacturing capabilities.
Competitors:
Analog Devices (ADI) and lots of other network chip manufactures My
Position: I own the stock |
