Smelling the Winds of Change in Texas

Texas Instruments (NYSE: TXN  ) just brought some swagger to this rodeo.

In last night's second-quarter report, TI showed us good numbers and an optimistic outlook. Revenue came in at $2.46 billion -- 27% below the year-ago period but up 18% quarter over quarter. $0.20 of earnings per share represented a 55% annual drop but was a clear improvement over the measly penny per share seen last quarter. Importantly, operating cash flow ticked up 7% over last year, showing that TI still has muscle where it really counts.

And it all adds up to daybreak in Texas. Intel (Nasdaq: INTC  ) sees healthy consumer spending fueling a winsome summer, and TI follows up with another cheery consumer market assessment. Sales landed in the upper end of revised and boosted guidance, fueled mainly by "high-volume equipment manufactured in Asia, notebook PCs, hard disk drives, smartphones, and consumer products such as TVs and video game systems."

"We understand that uncertainty continues in the in-demand environment and we will keep our operations flexible to respond to changing customer needs," said CEO Rich Templeton. Apple (Nasdaq: AAPL  ) might buy a slew of media processing chips here and there, but TI's largest customer, Nokia (NYSE: NOK  ) , is not having the time of its anthropomorphic life right now.

TI needs to stay on its toes in order to adapt to these rapidly changing market conditions, so the asset-light manufacturing strategy makes a lot of sense today. No wonder that the likes of Advanced Micro Devices (NYSE: AMD  ) have followed in TI's outsourcing footsteps.

For the tech market meteorologists out there, we have a slew of important bellwether reports coming up in the next few days, including Microsoft (Nasdaq: MSFT  ) on Thursday, Apple tonight, and Cisco Systems (Nasdaq: CSCO  ) in two weeks. As for reading TI's tea leaves, I think we just got another strong vote for a consumer-driven market recovery. The other tech heavyweights should concur.

Further macroeconomic Foolishness:

Apple is a Motley Fool Stock Advisor recommendation. Intel, Microsoft, and Nokia are Motley Fool Inside Value selections. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.


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