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Subject:  Re: RM Ranker TXN Q1 2000 Date:  5/19/2000  12:04 PM
Author:  geoffchase Number:  6265 of 8329

In this scenario, TXN Net Cash looks OK but it does not appear to rate a 4 in monoploy status. Any thoughts on Net Cash in general and TXN specifically?

I agree in general. Here are some thoughts on why I use them.

1. for DSP in hot items like handsets TXN is in the #1 and #3 handset makers (Nokia and Ericsson) but MOT is the #2 seller using their own co-developed chips so they do belong there.

2. Now MOT is terrible at cash management and they are a major competitor so I didnt feel rigth leaving them out.

3. ADI has great financials but a much lower market presence in sales and in reputation. They are good, but, not as visible as TXN. IMO the good financials will allow them to do well but they arent as serious a competitor in sales. Hence, when they "cancel" (MOT and ADI) on a ranker I dont feel too bad.

4. A ranker is about an industry of competitors not just one. I figure they'd lose a couple of points to if MOT werent included but they'd also gain a couple of another competitor like Infineon (IFX) or STM were used due to their "very average" financials. Bottom line is you're right, but, also compared to the industry average TXN does pretty well, so perhaps they do deserve those points. I guess it's a judgement call.

My overall opinion. ADI is financially, and to an extent technologically, as well as mgmt execution-wise the only serious threat to TXN, but, they are also very very small and lots of cash still helps you in that battle if you're TXN as you have more to invest in the technologies that will break the competitors back. So, overall I suspect the ranker while not perfect is doing OK here, but, it does pay to keep an eye on it and as I noted in my analysis I am not happy with TXN's recent direction in terms of debt and will have to keep a close eye on that. So, while they get a few "free" points this time perhaps it will cost them next time.

Sorry to not have a more definitive answer. cheers,


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