CNBC’s Jim Cramer on Friday critiqued Texas Instruments, saying the semiconductor company is not living up to investors’ expectations or trying to expand into less cyclical markets.
“I’m absolutely convinced that if Texas Instruments wanted to, it could go beyond its cyclical nature. But it won’t,” he said. “It’s content to remain as it is. It’s just not content with the critics.”
Despite beating on earnings and revenue, Texas Instruments failed to impress when it reported Thursday, with Wall Street disappointed by its earnings forecast for the current quarter. The chip maker predicted 94 cents to $1.16 a share, compared with an average estimate of $1.17 per share, according to LSEG. By Friday’s close, the stock was down more than 7%.
According to Cramer, Texas Instruments “feels like a relic,” as it makes great industrial and auto chips, which account for 70% of its revenue, according to Bloomberg. Both of those markets are currently in a slump, and while Cramer said they could see a boost if the Federal Reserve cuts rates, that’s not a guarantee. He argued that the company makes the best of chips in its targeted markets, but said that’s not enough for investors.
If Texas Instruments were a private company, this focus on autos and industrials might not be an issue, Cramer continued. But right now, the company isn’t serving shareholders as they expect it to do, he said. He compared Texas Instruments to peer Micron, saying that company was able to successfully expand its focus from commodity chips to high bandwidth memory chips for the data center.
“Texas Instruments … doesn’t’ seem to care if you don’t like them,” Cramer said. “So, there’s no reason to own the stock, unless you think that the company’s really going to take itself private or put itself up for sale, and I don’t think they’re going to do that.”
Texas Instruments did not immediately respond to request for comment.
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