Texas Instruments (TXN) will be holding an analyst day today (6/9/08) after the close. Citi expects an in-line mid-quarter despite risks of order cancellations from TI’s major European customer and evidence of lagging production at TI itself. Citi’s field checks suggest that TI’s major European customer is stable and the firm attributes TI’s issues problems to the high levels of finished goods inventory shown at the end of Q1 08.
TXN’s current success is partially dependent on Nokia (which was just downgraded today at AmTech):
…we believe the announcement of new phone models by Nokia will spark a significant order increase, a catalyst for TI shares.
As a reminder, TI’s shipments closely follow Nokia’s shipment levels. As we asserted in our 05/18/2008 upgrade of TXN, we believe TI is holding on well to Nokia share gain. The recent negative pre-announcement from Infineon underscores our view, noting that Infineon pointed to a delay in their ramp with Nokia as a source of the shortfall.
Regardless of headwinds, Citi is bullish long-term with “growing conviction”:
We point out that TI’s estimated R&D associated with handsets ranks among the highest in the world. We assert that scale is increasingly important in the handset business. Integration of baseband and applications takes large amounts of IP and design expertise. We therefore have
confidence in TI’s longer-term position in the fast-growing handset market and reiterate our Buy rating.
Citi reiterates its BUY on Texas Instruments (TXN), target of $39.