Thursday, November 16, 2006

Calls of Note Part 2

- Baird notes their checks indicate STMicroelectronics' (NYSE:STM) Nomadik multimedia processor is currently ramping into several phones at a leading Asia-based mobile phone OEM and designed into a U.S.-based high-volume phone at the same OEM, all at the expense of TI's (NYSE:TXN) OMAP. Nomadik's scheduled ramp in Nokia smartphones apparently pushed out but also at the expense of OMAP.

Baird believes TI's OMAP is now on the defensive to regain market share, which could lead to pricing pressures. They believe OMAP could lose significant share in the second half of 2007.

Firm remains on the sidelines on TXN shares given these dynamics combined with a mix shift towards lower-end phones.

Notablecalls: Two points - 1) Nokia did it bc they need to get better prices. TXN has been charging them monopoly pricing. 2) NTT DoCoMo has also been cutting their dependence on TI's OMAP app chip. Keep away from TXN as the co is way too much leveraged to the handset business. And reg readers already know how I feel about the handset business.

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