Texas Instuments has not done too well lately. While short interest in the company’s stock fell sharply in November, down 9.1 million shares to 27.1 million shares, the stock has dropped from $34 at the end of September to its current level of $30.
Not everyone can be right here, both the longs and the shorts.
Forty-three analysts cover TI’s stock, according to The Motley Fool, so there is no lack of opinion on the company’s future. The company has underperformed the S&P 500, but past performanc is not a sign of future results.
The concern about TI may revolve around whether the cell phone market will keep growing and whether TI can gain share. The number of shares sold short would seem to indicate that at least some portion of the market thinks so. A number of forecaster believe that overall cell sales will grow less than 10% next year and then pick up in 2008. But, TI is trying to attack the markets that are growing most quickly, especially China. The company has developed a low cost chip to power inexpensive smartphones with the big Asian coountry as the primary target.
On the back of an envelop it would appear that TI may not do extremely well in the next couple of quarter, if the cell market growth slows. But, if less expensive phones will drive demand in the fast growing markets, TI has put itself at the center of the action.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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