by Calculated Risk on 4/20/2009 07:35:00 PM

Here are some excerpts from the Texas Instruments conference call (ht Brian)

You'll recall at the midquarter update we raised the middle of our guidance range and referenced that 3G communications infrastructure in China was the most notable area of better than expected strength. In the last few weeks of the quarter, in addition to base stations, we also saw better than expected demand from notebook computers, some other sectors of the handset market, as well as from LCD-based HDTVs.

Regionally, most of the strength is coming from Asia, while the other regions remain subdued. Therefore, we wouldn't characterize the stronger demand as broad based, as it was concentrated in a few high volume end markets and the Asian region. Nonetheless, it is encouraging to see our revenues stabilizing, albeit at what remains a low level.

We also caution that the stabilization is likely being driven by customers that are slowing their inventory reduction and not by broad-based increases in end consumption or by customers rebuilding inventory. Let me explain. Over the last few quarters, we saw dramatic drop in demand for our chips because customers slowed their production and began to reduce the chip inventory they had in stock. Now that they have realigned their own production with the lower level of consumer end demand and reduced their existing chip inventory, order trends for our chips have started to improve. This leads us to believe that the worst of the inventory drain is now finished and our shipments will more closely reflect our customers' production levels. However, the most important determinant of our business levels in the second half of this year will be the real end consumption trends. From our perspective, there remains significant uncertainty about the direction of end consumption. As a result, we are careful not to misread the completion of inventory reduction as a return to higher end demand. Our approach is that we will keep our operations highly flexible to respond to whatever direction demand will track, while remaining highly diligent to inventory and costs.
emphasis added

More on inventory correction:

The reduction in inventory that we achieved resulted in inventory days declining to 77 at the end of the quarter, compared with 94 days at the end of the year-ago quarter, and 89 days at the end of the fourth quarter. TI orders in the quarter were 2.19 billion, up 18% sequentially. After a five-month slide, product orders bottomed in the month of December and increased each month through the first quarter. TI book to bill increased to 1.05 in the quarter from 0.75 in the prior quarter.

But they have drastically reduced capital expenditures:

Going forward, we anticipate for this year that we would spend upwards of $300 million on capital for the year. ['08 was $763 million, '06 was $1.27B]

And from the Q&A:

Analyst: Could you go into a little bit more detail on what you guys are looking for that would enable you to think that we are at the beginning of a new semiconductor cycle?

TXN: What we saw was just one region, primarily Asia, and just a couple of large verticals, primarily the -- infrastructure, notebooks, and some handsets and LCD TVs as picking up a little bit late in the quarter. We did not see it importantly in other regions around the world and we did not see it in the industrial or consumer sectors. So until we see demand pick up in other regions, as well as in other sectors, we don't believe that we're looking at something that suggests that there's an overall increase in demand to be anticipated. Right now, it feels more to us like our demand [from] our customers are lining up their orders to end demand – at an overall level lower than it has been for quite sometime.