Christopher Danely, an analyst with J.P. Morgan, says his checks find that TI’s DSP business “remains slow due to product mix and share loss in Japan,” and that the company’s analog business “is weaker than expected due to the inventory correction.” Danely also finds that the company’s book-to-bill ratio is below 1.0, and that as a result first quarter revenue is likely to decline 4% sequentially. He thinks the company’s fourth quarter inventory will rise to 81 days, higher than its previous record of 74 days in the first quarter of 2001.
Danely, who has a Neutral rating on the stock, cut his 2006 profit forecast to $1.63 a share from $1.68; for 2007 he went to $1.69 a share from $1.71.
Joe Osha, an analyst at Merrill Lynch, likewise cut his 2006, 2007 and 2008 revenue and profit estimates for the company. “For the near-term, we don’t think that consensus estimates yet fully reflect the likely impact of the industry-wide supply chain correction that’s now taking place,” he wrote this morning. “Thinking longer term, our work suggest that TXN’s wireless revenue growth is going to decelerate to 4%-5% in 2007 and early 2008 before picking back up.”
For 2007, Osha dropped his GAAP EPS estimate to $1.68 a share from $1.89. “We think the Street is expecting cuts following the mid-quarter update later today, but we think we’ll still be below consensus tomorrow.” He also cut his fourth quarter EPS estimate by two cents to 40 cents, which trims 2006 to $1.65. His 2008 estimate drops to $2.09 from $2.20. “Peaking margins, a peaking business cycle and a market that refuses to let the stock get cheap have eliminated any money-making opportunities for the past 16 months,” Osha writes. “We see more flat stock price performance for the intermediate term, and our rating stands at Neutral.”
Cody Acree, an analyst at Stifel Nicolaus, says he sees Texas Instruments this afternoon narrowing its forecast to the lower-end of its previous revenue and EPS range “on more hesitant order patterns in the wireless supply chain.” His view is that the stock price already discounts a reduced outlook from the company. He thinks the company will reduce EPS guidance to 40-43 cents a share; the old guidance was for 40-46 cents. Acree today cut his own estimate today to 42 cents, from 43 cents. He also trimmed his 2007 forecast to $1.81 a share from $1.83. He continues to rate the stock a Hold.
Texas Instruments this morning is actually up 20 cents at $29.60.