The writing is on the wall: You should expect the mobile phone industry to look a lot healthier across the board when the next wave of earnings reports come in.
First, Texas Instruments (NYSE: TXN) upped its guidance, mainly thanks to a rebound in cell phone chip orders. Now, National Semiconductor (NYSE: NSM) is showing honest-to-goodness improved order volumes from the same sector, and talking about a rising trend.
National reported sales of $281 million in its fourth fiscal quarter, followed by a net loss of $0.28 per share. Both figures were down substantially from last year and from the third quarter, but that doesn't mean that the news was all bad.
"Business conditions improved through the quarter," said CEO Brian Halla. "We saw increasing orders from our wireless handset customers as they began ramping production of new smartphone models." Order bookings were up 30% over last quarter, pushing the book-to-bill ratio over the crucial 1.0 mark for the quarter, and so management should expect to see higher revenue billings in the next quarter.
One swallow does not a summer make, but put a couple of sweetly chirping birds together and you have the beginnings of a flock. Between TI and National, I think we have enough evidence to call a bottom to the protracted slump in cell phone sales. In other words, I expect good news from Research In Motion (Nasdaq: RIMM) next week, though the Palm Pre is a little too fresh to move the needle for Palm (Nasdaq: PALM) the week after that. Supplier strength further indicates Apple (Nasdaq: AAPL) and Nokia (NYSE: NOK) should both look good later in the summer.
And of course, other chip specialists should continue to report variations of the same good news as National and TI. Broadcom (Nasdaq: BRCM) should kick off a whole pack of chip updates right alongside Apple's report.
So pick your poison -- chips or smartphones -- and invest accordingly. The storm clouds are finally drifting away.
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