Texas Insruments Guides Even Worse; More Chip Weakness Expected

If you look at the street’s comments today, you should have already been expecting a lower revision to the company’s prior guidance like so many chip stocks came clean with last week.  The problem is that the guidance is even worse than you would have guessed.  The street was expecting revenue expectations of $0.42, yet the company gave guidance with its last earnings at $0.40 to $0.46 (and estimates were then $0.44-0.45). Now it is targeting $0.37 to $0.40 in EPS.  Revenue for this quarter was said to be pegged at $3.6 Billion by the street (company had prior guidance $3.46 to $3.75 Billion), but now the company is showing $3.35 to $3.5 Billion in expected revenues.

Because the semiconductor names had all essentially guided down, the street was bracing for lower numbers.  But not this much lower.  Shares are down 0.7% at $29.10 on last look.  In regular trading the TXN shares closed down 0.35% at $29.30.  On the surface this doesn’t offer any compelling rebound or any compelling reason to be piling in yet, which is why the stock is lower.  Unless it is hiding some good news this is likely going to keep pressure on chip stocks.  The SEMI HOLDRS (SMH) closed down 0.35% at $34.09, but the SMH shares are doww at $33.90 in after-hours activity.

Jon C. Ogg
December 11, 2006