Can we really believe Texas Instruments (NYSE:TXN) when it says the worst is over?
Think about it, for second: Inventory days are at a five year high as Texas Instruments and other chip-makers think that as in 2004, the inventory shortage will follow a surge in demand. "Key difference," says one skeptic, "is that in 2004 end markets were on fire and the GDP was growing 3% to 3.5%; this time around end markets are very weak and GDP is 1%. So they're all building inventory instead of cutting back, which boosts margins artificially."
Right now, that doesn't appear to be the case and you can only wonder where all of the chips, based on TI's optimistic forecast, will be going. "The closer you get to the customer and demand, the worse the data looks," says another skeptic. "Gartner PC data suggests a buildup of PCs at retail. Target says April sales will slow drastically. The Big Five handset vendors are down 15% sequentially versus expectations of down 7% to 10% sequentially. Lexmark (NYSE:LXK) just vomited on itself."
The list goes on and on, suggesting, says the first skeptic, "We had better have a GUSHER of end demand starting right now or we are in for the all-time record inventory car crash."