- JP Morgan notes their checks indicate orders for Texas Instruments' (NYSE:TXN) analog business (37% of 2Q06 sales) have declined recently due to a reduction in lead times and excess inventory, resulting in a book to bill below 1.0 for the first time since the last inventory correction in 2004.
They believe most of the reduction in bookings is for TI's analog business due to an inventory correction, with some reduction in bookings from the wireless end market due to share loss in Japan to Renesas. They do not believe the push-outs are company specific as recently several TI competitors such as Maxim, National Semiconductor and Microchip have negatively pre-announced and/or reported declines in bookings.
Firm notes they been Neutral on TXN stock due to concern that the company's extended lead times earlier in the year might lead to double ordering and an inventory correction, and it appears their fears are becoming realized.
They would note the previous inventory correction led to a roughly 20% reduction in TI's estimates. As a result, they expect the company's revenue and gross margins to be below normal seasonality for the next two quarters.
Due to the declining book to bill, the firm is lowering their C06 revenue and EPS estimates from $14.6 billion and $1.71 to $14.5 billion and $1.67. They are also lowering C07 revenue and EPS estimates from $15.8 billion and $1.88 to $15.1 billion and $1.79.
Notablecalls: TXN is the canary in the Semi mine. Consensus estimates are still way too high and have to be taken down. Think the stock (and the whole Semi space) is going to be lower in couple of months.
They believe most of the reduction in bookings is for TI's analog business due to an inventory correction, with some reduction in bookings from the wireless end market due to share loss in Japan to Renesas. They do not believe the push-outs are company specific as recently several TI competitors such as Maxim, National Semiconductor and Microchip have negatively pre-announced and/or reported declines in bookings.
Firm notes they been Neutral on TXN stock due to concern that the company's extended lead times earlier in the year might lead to double ordering and an inventory correction, and it appears their fears are becoming realized.
They would note the previous inventory correction led to a roughly 20% reduction in TI's estimates. As a result, they expect the company's revenue and gross margins to be below normal seasonality for the next two quarters.
Due to the declining book to bill, the firm is lowering their C06 revenue and EPS estimates from $14.6 billion and $1.71 to $14.5 billion and $1.67. They are also lowering C07 revenue and EPS estimates from $15.8 billion and $1.88 to $15.1 billion and $1.79.
Notablecalls: TXN is the canary in the Semi mine. Consensus estimates are still way too high and have to be taken down. Think the stock (and the whole Semi space) is going to be lower in couple of months.
No comments:
Post a Comment