Mr. Market body-slammed Texas Instruments (NYSE:TXN) yesterday after a disappointing report on Monday night. The numbers were fine, well within the updated management guidance, but the book-to-bill ratio was below 1. Together with a lowered sales outlook for next quarter, that points to lower demand for TI's products in the near term.

As you might imagine, it's more cell-phone shenanigans. Ericsson (NASDAQ:ERIC) just decided to source 3G baseband chips from multiple suppliers rather than from just TI, and there are rumblings of a similar move from Nokia (NYSE:NOK).

All of that is happening on the infrastructure side of the equation. On the handset end, management said that Nokia, Sony Ericsson, and Motorola (NYSE:MOT) all are looking to develop products around new TI chips, in some cases original designs commissioned by one of the handset designers.

Of course, TI can hardly be blamed for its customers' ordering decisions. What the company can control is operational efficiency, where gross and operating margins both continue to expand. That's the asset-light manufacturing strategy helping out with the gross take again, as well as lightening the capital-expense load compared with last year and thus inflating free cash flow.

Tonight's earnings report from rival handset chip maker STMicroelectronics (NYSE:STM) will fill in some of the blanks in our view of the wireless market. Qualcomm (NASDAQ:QCOM) follows in two weeks, to complete the puzzle.

Until then, this week's price drop and earnings growth adds up to the lowest P/E ratio we've seen since early this year. The relative valuation looks cheap next to Qualcomm, Analog Devices (NYSE:ADI), and a number of other rivals that tend to trade above 20 times earnings.

It looks like we have a generous discount to TI's market position and earnings power, and I don't think there's anything fundamentally wrong with the Dallas giant. You know what it means, Fool: Do your homework, and see whether TI's for you.

Further Foolishness:

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.