Summary:

Looks like Texas Instruments is becoming the big winner of this trend towards more powerful feature packed phones. Healthy demand from the phone makers is helping TI boost its revenues and sales, as per its mid-quarter update on March 8, 2004. The company narrowed its revenue […]

Looks like Texas Instruments is becoming the big winner of this trend towards more powerful feature packed phones. Healthy demand from the phone makers is helping TI boost its revenues and sales, as per its mid-quarter update on March 8, 2004. The company narrowed its revenue guidance towards the top end of its earlier expectations. TI now expects revenues in the range of $2.84-to-$2.95 billion, an uptick in sequential revenues of 2-6.5%, as against an earlier sequential growth expectation of a negative 1.8% – to a positive 6.5%. TI expects the diluted earnings per share (EPS) to be in the range of 19-22 cents, as against its earlier expectation of 16-22 cents.

First Global, a London-based research firm expects the company’s earnings to grow at “a CAGR of 39% for the 2003-2005 period (as against our expected earnings CAGR of 55% for Analog Devices (ADI) for
2003-2005). However, at its current levels, TI is trading at 29x times our revised FY04 estimate of $1.02 and 23x times our FY05 estimate of $1.31– not exactly inexpensive in a cyclical industry.” There are some other bright spots for the company according to First global.

bq. There is scope for significant growth in the wireless infrastructure space, as 3G deployments take place at a rapid pace in Europe, given TI’s strong product position in the 3G wireless infrastructure side. However, wireless infrastructure currently forms a small portion (5%) of TI’s total wireless revenues.

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