Considering that Texas Instruments
TI crowed about its great inventory position, but I'm not buying it. With 8% inventory in the past year vs. sales growth of just 1%, the situation is not a disaster, but it's a trend in the wrong direction, and the inventory levels are nothing to brag about. On the bright side, though, Texas Instruments did keep its accounts-receivable balances in check.
Texas Instruments joins a crowded field of tech companies that have seen inventories pile up lately. In the past year or so, fellow tech firms such as Cisco
Even so, the earnings release makes TI sound upbeat about the future -- the company feels that its inventory problems are in the rearview mirror, with growth as the next stop. But there aren't exactly signs of robust growth ahead. We all may want to own a flat-screen TV that requires one of TI's DLP processors, but with lower prices on the units in the future a near lock, it seems most folks are holding off on making the big purchase. Eventually this, too, will change, but I think you'll see more of a positive inventory divergence in TI's numbers first.
While we all we wait for this growth, TI is willing to keep paying out a nominal dividend and buying back shares. Given that Texas Instruments is reasonably priced, that's pretty good news, because it's showing it has plenty of cash to burn, and buying back its reasonably priced shares while growth is slow is a great way to reward shareholders.
To read more about Texas Instruments and the always-fun analysis of inventories, check out:
- Bill Mann's "Sleepytime at Cisco"
- "Texas Toast" by Rick Munarriz
- My favorite bedtime tale: "The Inventory Story"
- "Intel's Mongolian Contortionist Act" by Bill Mann
Fool contributor Nathan Parmelee has no financial interest in any of the companies mentioned.