Texas Instruments (TXN) Offering Possible 29.37% Return Over the Next 36 Calendar Days

Texas Instruments’s most recent trend suggests a bullish bias. One trading opportunity on Texas Instruments is a Bull Put Spread using a strike $125.00 short put and a strike $115.00 long put offers a potential 29.37% return on risk over the next 36 calendar days. Maximum profit would be generated if the Bull Put Spread were to expire worthless, which would occur if the stock were above $125.00 by expiration. The full premium credit of $2.27 would be kept by the premium seller. The risk of $7.73 would be incurred if the stock dropped below the $115.00 long put strike price.

The 5-day moving average is moving up which suggests that the short-term momentum for Texas Instruments is bullish and the probability of a rise in share price is higher if the stock starts trending.

The 20-day moving average is moving up which suggests that the medium-term momentum for Texas Instruments is bullish.

The RSI indicator is at 61.2 level which suggests that the stock is neither overbought nor oversold at this time.

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LATEST NEWS for Texas Instruments

Earnings Preview: Texas Instruments (TXN) Q2 Earnings Expected to Decline
Tue, 14 Jul 2020 16:30:04 +0000
Texas Instruments (TXN) doesn’t possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Analog Devices to Buy Rival Maxim in $21 Billion Chip Deal
Mon, 13 Jul 2020 16:38:59 +0000
(Bloomberg) — Analog Devices Inc. agreed to acquire rival Maxim Integrated Products Inc. for $20.9 billion in stock, heralding what may develop into a new round of consolidation in the $400 billion semiconductor industry.Analog Devices will pay 0.63 share for each Maxim share, representing a 22% premium to Maxim’s closing share price on Friday, the two companies said in a statement early Monday. Analog Devices shareholders will own about 69% of the combined company, which will be valued at about $68 billion including debt, the companies said.The acquisition of San Jose, California-based Maxim creates a larger rival for Texas Instruments Inc. in the market for analog and embedded processor chips, crucial components in the spread of computing and intelligence to everyday devices. Analog Devices shares slipped 4.3% to $119.16 at 11:36 a.m. in New York. Maxim was up 11% to $71.02.After a lull in such combinations caused by trade tension between China and the U.S. and regulatory holdups, Nvidia Corp. won approval for its acquisition of Mellanox Technologies Ltd. in the Asian country earlier this year, creating new confidence that deals such as the Maxim purchase can go ahead. Analog Devices Chief Executive Officer Vince Roach said he’s confident the transaction will close within a year.“The skills that we have are becoming increasingly scarce,” he said in an interview. “Now we have 10,000 engineers to point at a $60 billion opportunity. It brings us more scope.”Analog Devices also raised its revenue forecast for the current quarter to about $1.45 billion from an earlier target of about $1.32 billion. Profit will be about 91 cents a share compared with an earlier target of 72 cents.Acquisitions in general are starting to return after several quiet months while companies dealt with the fallout from the Covid-19 pandemic. The move by Analog Devices comes on the heels of Uber Inc. announcing a $2.65 billion deal for Postmates Inc., Allstate Corp. agreeing to a record $4 billion takeover of National General Holdings Corp. and Warren Buffett’s Berkshire Hathaway Inc. spending roughly the same amount on a gas pipeline and storage assets.Some chip deals have either been delayed or abandoned if they require approval in China, the world’s largest market for semiconductors. The U.S. is home to the biggest chunk of the world’s producers of the electronic components.Roach said he chose to go with a stock-based transaction rather than cash to reduce the possible impact of volatility in the market for his products caused by the pandemic. While he’s known his counterpart at Maxim, Tunc Doluca, for years, the two never met face-to-face during the negotiations.The transaction isn’t about cost cutting, Roach said. Maxim will give ADI more scope and abilities in markets such as automotive, communications – where it will add more fixed-line assets, and digital healthcare, he said.Analog Devices is currently less than half the size of market leader Texas Instruments by revenue. While Maxim wouldn’t allow it to close the gap totally, it would broaden the range of products in the analog portfolio, something that Texas Instruments has touted as helping to cement its dominance.All three companies specialize in analog and embedded computing components. Once a sleepy backwater of the industry, this segment has enjoyed a resurgence as the list of uses and customers has grown in recent years. Analog chips convert real-world things like sound and pressure into electronic signals, and the rush to add automation to factory equipment and buildings and to move cars toward a world where they won’t need human drivers has stirred new demand.It’s also a very profitable area of the chip industry. Analog Devices and Maxim have gross margins, or the percentage of sales remaining after deducting the cost of goods sold, in the region of 65%.Since 2015, the Philadelphia Stock Exchange Semiconductor Index has tripled in value. The benchmark index now has a market capitalization of more than $1.5 trillion. Over that same period, chip companies have been increasingly consolidating to help them lower costs and serve customers that have done the same. Their earnings have become more predictable and their cash generation has provided them with war chests and the ability to carry debt they couldn’t have sustained in the past.(Updates with CEO comments)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

A $21 Billion Chip Deal Messes With Texas Instruments
Mon, 13 Jul 2020 14:14:12 +0000
(Bloomberg Opinion) — The boring part of the chip market is getting more interesting. For Texas Instruments Inc., that means stiffer competition from a stronger rival. Early Monday, Analog Devices Inc. announced a definitive agreement to acquire Maxim Integrated Products Inc. for about $21 billion in an all-stock deal that works out to a 22% premium to Maxim’s close on Friday. Maxim shareholders will get 0.63 share of Analog stock for each share they own, resulting in 31% ownership of the combined company. The transaction is expected to be completed in the summer of 2021 and is subject to regulatory and shareholder approvals.The deal would combine the No. 2 and No. 3 players in analog chips, one of the less sexy and more workaday corners of the semiconductor market. According to Bernstein, the category accounted for 13%, or about $54 billion, of the global $412 billion chip market last year. Analog chips have the specific function of converting physical world signal — including sound, temperature and pressure — into digital data. Compared to microprocessors — which are updated annually, cost up to hundreds of dollars per unit and require the latest bleeding-edge expensive chip manufacturing technologies — analog chips are very different. A typical analog product design can have a shelf life of many years, and they are inexpensive, often selling for less than a dollar each. And because they are also easier to make, they have high profit margins.But there are downsides for this segment of late. Analog-chip companies have faced growth challenges and have under-performed as a result. Shares of Texas Instruments, Analog and Maxim have risen less than 5% this year through July 10, versus a double-digit gain for the Philadelphia Semiconductor Index. The main problem is analog’s end markets are broad-based and account for the “nuts and bolts” basic chips used in all industry sectors – such as automotive and industrial. As such, they are beholden more to general economic trends. Wall Street analysts estimate fiscal 2020 sales declines of 14%,  12% and 7% for Texas Instruments, Analog and Maxim, respectively. In contrast, analysts forecast Nvidia Corp. – which makes digital chips for the surging growth applications of gaming, cloud-computing and artificial intelligence – will generate 33% revenue growth this year. Investors have taken note, bidding up Nvidia’s stock price roughly 80% this year.Given all that, it’s not surprising that a secondary player in the market such as Analog would feel compelled to do something to improve its fortunes. The classic consolidation playbook of  expense savings will have to do. The company said it will be able generate $275 million of cost synergies by the end of the second year following the deal’s close, adding the merger will be accretive to earnings within 18 months.More importantly, ADI-Maxim would create a stronger No. 2 player in the “standard linear,” or non-customized, analog chip market behind Texas Instruments. The new merged company would get scale benefits to spread out its chip design expenditures to a larger revenue base, improving profitability. To illustrate the potential, Texas Instruments, which generates more than double the sales of its rival, spent just 11% of its revenue for research & development last year, versus 19% for Analog. Further, a combined company would have more pricing power with customers.On a financial basis a deal makes sense. What about the regulatory risk? Amid the heightened political environment surrounding the technology industry, there will be some antitrust scrutiny. But as the deal would make a No. 2 player stronger, versus adding to Texas Instrument’s pole position, and because the end consumer likely won’t directly see price hikes, approval from Western regulators shouldn’t be difficult. The main barrier could be China. If geopolitical tensions between the U.S. and Asian country escalate in the coming months, the approval process for U.S. corporate deals may get arduous.But except for that risk, shareholders in the two companies should rejoice over the prospect of this merger.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron’s, following an earlier career as an equity analyst.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

Top 5 Things to Know in the Market on Monday, July 13th
Mon, 13 Jul 2020 06:43:28 +0000
By Geoffrey Smith

Analog Devices Near Deal to Buy Maxim for $17 Billion
Mon, 13 Jul 2020 01:23:37 +0000
(Bloomberg) — Analog Devices Inc. is close to an all-stock agreement to acquire Maxim Integrated Products Inc., according to people familiar with the matter.The semiconductor companies are talking about a deal that values San Jose, California-based Maxim at more than its current market capitalization of roughly $17 billion. Norwood, Mass.-based Analog has a market value of $46 billion and also has a large office in the San Jose area. The deal could be announced as early as Monday, though discussions could still fall apart, said the people, asking not to be named discussing private negotiations.Representatives for Analog Devices and Maxim declined to comment. The Wall Street Journal first reported the negotiations.Acquisitions are starting to return after a lull of several months caused by the Covid-19 pandemic. This comes on the heels of Uber Inc. announcing a $2.65 billion deal for Postmates Inc., Allstate Corp. agreeing to a record $4 billion takeover of National General Holdings Corp. and Warren Buffett’s Berkshire Hathaway Inc. spending roughly the same amount on a gas pipeline and storage assets.Some chip deals have either been delayed or abandoned if they require approval in China, the world’s largest market for semiconductors. The process has been complicated by the ongoing trade war between China and the U.S.Analog Devices is currently less than half the size of market leader Texas Instruments Inc. by revenue. While Maxim wouldn’t allow it to close the gap totally, it would broaden the range of products in the analog portfolio, something that Texas Instruments has touted as helping to cement its dominance.All three companies specialize in analog and embedded computing components. Once a sleepy backwater of the industry, this segment has enjoyed a resurgence as the list of uses and customers has grown in recent years. Analog chips convert real-world things like sound and pressure into electronic signals, and the rush to add automation to factory equipment and buildings and to move cars toward a world where they won’t need human drivers has stirred new demand.It’s also a very profitable area of the chip industry. Analog Devices and Maxim have gross margins, or the percentage of sales remaining after deducting the cost of goods sold, in the region of 65%.Since 2015, the Philadelphia Stock Exchange Semiconductor Index has tripled in value. The benchmark index now has a market capitalization of more than $1.5 trillion. Over that same period, chip companies have been increasingly consolidating to help them lower costs and serve customers that have done the same. Their earnings have become more predictable and their cash generation has provided them with war chests and the ability to carry debt they couldn’t have sustained in the past.(Updates with further details from fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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