Patent News Keeps Bolstering Texas Instrument Stock
Texas Instruments Inc. stock continued to climb in active trading Wednesday after the announcement that the company was awarded an important patent in Japan.
Industry analysts say Texas Instruments could reap hundreds of millions of dollars in royalties per year from Japanese computer-chip manufacturers because of the patent on integrated circuits, which took 29 years to be approved.
Texas Instruments officials declined to speculate on how much the Dallas-based company might gain from the patent on integrated circuits it developed in 1958. But Richard J. Agnich, a senior vice president, said: “The opportunity exists for Texas Instruments to earn a significant ongoing stream of royalty income.”
The stock jumped $4.75 a share to $36.50 on Wednesday on the New York Stock Exchange after a gain of $2.25 a share Tuesday, giving it a two-day gain of almost 24%.
“I have an aggressive ‘buy’ recommendation of this stock,” said Richard Whittington, semiconductor industry analyst for Kidder, Peabody & Co. in New York.
That wasn’t the feeling throughout the industry.
“It sounds good. It feels good, but we don’t know how good,” said Erik Jensen, a semiconductor analyst for Robertson, Stephen & Co. in San Francisco. “I am not recommending the stock at this point.”
Jensen said he doesn’t think that earnings from the patent will appear immediately or that all the benefits will be in dollar form.
Analysts said the patent could aid Texas Instruments in renegotiating licensing agreements for its products with Japanese firms in 1990.
As far as the news making Texas Instruments a takeover target, Whittington said: “It makes them a far more valuable investment, and that’s all I’m willing to say.”
Texas Instruments spokeswoman Terry West said the company has programs in place to prevent a takeover.
Texas Instruments knew about the patent approval on Oct. 30 but didn’t announce it until Tuesday. Still, rumors from Japan arrived in time for Texas Instruments stock to jump in late trading Tuesday on heavy volume.
According to Securities and Exchange Commission rules, a company does not have to disclose every important development as it happens.
Texas Instruments officials declined to say Wednesday whether the SEC had questioned the company or criticized it for keeping the information secret so long. SEC spokeswoman Mary McCue said the agency had no comment.
The NYSE requires listed companies to make full and timely disclosure of all material corporate developments. NYSE spokesman Richard Torrenzano would only say, “We’ll be looking into it.”
Texas Instruments general counsel Richard Agnich said the company has discussed the importance of patents in general in quarterly statements, including its most recent one on Oct. 20.
Texas Instruments’ good fortune raised the possibility that National Semiconductor Corp. of Santa Clara, Calif., might also receive a Japanese patent, since it is the parent of another U.S. company that once owned a basic U.S. patent on the integrated circuit.
