TI Stock Leaps as Industry’s Orders Surge
Texas Instruments touched an all-time high of $200 a share on the New York Stock Exchange today as the nation’s largest chip maker’s stock reacted favorably to a report of sharply improved industry orders.
Other semiconductor shares rallied early in the day but eased back later with the generally weak stock market.
In the industry report released late Thursday, the Semiconductor Industry Assn. said the March book-to-bill ratio, the widest measure of the computer chip industry’s condition, had reached the highest level in nearly three years.
“We are witnessing a very strong recovery in this industry and a broadening of sales,” said analyst James Barlage of Smith Barney, Harris Upham.
The measure of shipments to incoming orders climbed to 1.21, advancing for a sixth-straight month. This indicates that $1.21 of orders were received for every dollar’s worth of shipments. The figure exceeded analysts’ expectations of a gain to about 1.15 from the prior month’s 1.13.
“The number surprised everyone,” said stock trader William Lord of Shearson Lehman Bros.
Boosting orders was improved demand from the makers of products that require microchips, the tiny electronic circuits that go into electronic goods. Computer makers are the biggest consumers of microchips.
The strong order figures represent the continuation of a turnaround for the industry. The semiconductor makers, mired in depression-like conditions last year, sought trade protection, charging that Japanese dumping was causing prices to fall and industry losses to mount.
Some of the improvement in the book-to-bill may reflect buying in anticipation that trade sanctions by the United States against Japanese chip makers set to start in mid-April could drive prices higher in months ahead, analysts said. But other supply and demand factors also buoyed the orders.
“There is a lot of strength in the personal computer sector. Distributors are beginning to purchase chips more aggressively,” said Barlage.
He added: “We are seeing strength in the industrial sectors such as the instrumentation business and the control systems business.”
The average booking for the March book-to-bill totaled $910.8 million, up 15.6% from a month ago, and the highest bookings since September, 1984.
Texas Instruments stock jumped 3 to $200, its all-time high. Smith Barney’s Barlage said that besides the strong orders figures, Texas Instruments’ products will benefit more than other chip makers from the Reagan Administration’s recently proposed tariffs on Japanese microchips.
