- Stifel comments on Texas Instruments (NYSE;TXN) after Infineon announced Nokia as a new customer for its single chip E-GOLDvoice system on a chip, which will be used in Nokia's entry level voice centric phones, to be introduced in 2008. The Infineon solution competes directly with Texas Instruments LoCosto platform and is obviously making substantial progress into TXN's biggest customer. The IFX solution also competes directly with Silicon Labs AeroFONE.
While the split between Nokia phones using Infineon versus TXN is yet unclear, assuming about 25% of Nokia's volume moves away from TXN, the 2008 revenue impact could be $700 million - $1 billion compared to firm's 2008 revenue estimate of $14.9 billion, or approximately 5 - 7% of revenue.
Although not a dramatic portion of TXN's potential revenue base, the firm does see this announcement as a major negative catalyst to TXN's shares.
Firm would expect TXN's shares to be pressured by this announcement and that an upside catalyst is unlikely until improving trends in the handset market become evident, or TXN's customer base stabilizes. Accordingly, they maintain Hold rating.
Notablecalls: Expect to see pressure in TXN today.
While the split between Nokia phones using Infineon versus TXN is yet unclear, assuming about 25% of Nokia's volume moves away from TXN, the 2008 revenue impact could be $700 million - $1 billion compared to firm's 2008 revenue estimate of $14.9 billion, or approximately 5 - 7% of revenue.
Although not a dramatic portion of TXN's potential revenue base, the firm does see this announcement as a major negative catalyst to TXN's shares.
Firm would expect TXN's shares to be pressured by this announcement and that an upside catalyst is unlikely until improving trends in the handset market become evident, or TXN's customer base stabilizes. Accordingly, they maintain Hold rating.
Notablecalls: Expect to see pressure in TXN today.
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