Tuesday, October 24, 2006

Calls of Note Part 3

- Banc of America notes Eagle Test Systems (NASDAQ:EGLT) shares have been under pressure recently anticipating weak analog commentary from TXN (55% of EGLT's June quarter sales) in light of pre- announcements/weak numbers from other analog players.

TXN's 3Q06 earnings call highlighted few positive comments: 1) company'scommentary implies most weakness expected in the December quarter is tied to wireless handset market (35% of September quarter sales), in turn suggesting relative stability initshigh performance analogbusiness(18% of September quarter sales), and 2) analog inventories remain under control. Management views analog as a growth segment and the firm estimates TXN's high performance analog market share at 21% and overall analog share at 15-16%.

EGLT supplies test solutions to TXN's high performance analog segment. Texas Instrument was their largest customer in FY2005, about 44% of sales. TXN has spent roughly 80% of their 2006 estimated cap-ex of $1.3B at the end of 3Q06.

Maintains Buy and $23 on EGLT.

Notablecalls: Not actionable but good to know category.

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