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Friday, August 11, 2006

Texas Intruments Gets A Compliment

Stocks: (TXN)(MOT)(NOK)(INTC)(AMD)

Matrix Research recently upgraded Texas Instruments from a “buy” to a “strong buy”. Barron’s recently recommended shares in TI, based on the theory that its revenue streams are “diversified” among a number of products and not totally dependent on something like PC chips (read AMD and Intel).

But, there are better reasons to own the big chip company. One reason is that results are up but the share price is down. In April, TI’s shares changed hands at $36. After falling to $27 in late July, the shares now trade around $31.

In the quarter announced in late July, taking out gains from the sale of a business, EPS rose from $.38 a year ago to $.47 in the most recent period. Revenue rose 24% to $3.7 billion. Sometimes in a down market, Wall St. does not want to believe its won eyes, but the view at TI could hardly be better.

TI is riding the wings of mobile communications and high-def video. Its products are critical to the success of both industries and the products have built share on solid performance and good pricing. TI’s mobile chip sales rose 27% in the last quarter, and looking at Motorola and Nokia tells investors why. The sales of cell phones and other wireless devices show no sign of slowing in North American, Europe, or Asia. As a matter of fact, the cell phone has become the portable PC in some of these countries where it is used for everything from text messaging to VoIP to live video viewing.

TI is riding a wave that should not crest for some time. That being said, the shares are not expensive especially compared to their price just a few months ago.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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