Wonder check out this analysis of TXN and "tech". BTW I am not worried about my YM short swing trade in fact any bump here on weak vol. will have me adding to my short position. I am like Pavloves Dogs right about now. Late day move up imho has very little vol. to support it over time "Grasshopper":)
So why do companies keep choosing to IPO now, despite tough pricing conditions? Because there is a predominant fear that market conditions will worsen in the coming months.
For the tech market, it saw a nice rally back in August, but tech stocks remain volatile and will mostly likely suffer more than other sectors if the economy continues to deteriorate. Major firms like IDC and Forrester Research will cut technology budgets from 6.5% to 5.1% in 2008. A survey of CIOs by Goldman Sachs found “decelerating spending growth” by their departments.
Also, oil is again on the rise. Technology stocks generally benefit from a drop in crude prices on a fundamental basis. This connection has to do with institutions investing a percentage of their assets in high beta stocks, so when they sell off energy, they replace it with technology, and vice versa. In an energy boom, the institutions rotate out those tech stocks.
Oil prices matter to semiconductor companies, according to the CEO of National Semiconductor (NSM:NYSE), because of the enormous amount of energy it takes to run data centers and global networks.
Texas Instruments (TXN:NYSE) had an after market rally on Monday, following its mid-quarter update on earnings. However, the market does not look good for tech or semiconductors, which are responsible for 50% of TXN’s business.
But this announcement only minutely beat out analysts’ downgraded estimates for TXN. TXN continues to perform as a middle of the road stock with stagnant revenue and growth numbers. Texas Instruments posted third quarter earnings of $0.52 against $0.45 a year ago, despite slight revenue decline.
It narrowed its fourth quarter EPS of $0.48-$0.54 to $0.50-$0.54 on revenue of $3.60-$3.68 billion.
Due to Infineon Technologies (IFX:NYSE) being unable to complete their orders to Nokia, the company has been forced to use more wireless chips from Texas Instruments. This short-term gain has helped shore up fourth quarter earnings, but for early 2008 the outlook is less rosy.
Investors are unsure of TXN right now because the company is only maintaining its stance in analog devices, and has lost ground in wireless chips.
But earlier in the year TXN lost bids to Nokia (NOK:NYSE) and Sony Ericsson (ERIC:NASDAQ), as those two cell phone companies decided to convert to a multi-supplier approach. In October, analysts downgraded the stock as a result of this. However, the full losses have not been calculated in yet.
Looking at the two year chart for Texas Instruments in both February 2006 and 2007 the stock hit a $28 low, and then felt a bounce. We expect the stock to hit this lower resistance point before we exit our position.
And despite this week’s news, TXN has been unable to close above $33, which marks the upper line of resistance.
I GOT HIT ON A TON OF ARPIL 27.50 PUTS TODAY @ .47. NOW THAT IS A LOTTERY TICKET WAITING TO BE CASHED:))))))))))))
