Texas Instruments Updates: Kindle Fire Will Not Add Much Sizzle to Stock
Texas Instruments‘ (NYSE:TXN) design win in the recently launched Kindle Fire can push its lagging wireless business upwards. TI’s 1 GHz OMAP 4430 processor, which is at the heart of Amazon’s (NASDAQ:AMZN) Kindle Fire and can definitely increase the wireless revenue significantly.
Recent surveys and estimates peg Kindle Fire pre-orders at around 5 million units. According to industry analyst IHS iSuppli, the application processor in the Kindle Fire costs $15. The market for Kindle Fire in 2012 is expected to be around 20 million units, according to JP Morgan.
Our current estimate for Texas’ wireless revenue is pegged at around $2 billion. Kindle Fire has the potential to increase it to $2.3-$2.4 billion, a handsome 15-20% increase from its original estimate. However, this would translate into only 3% upside for TI stock, as wireless accounts for only 3% of Texas Instruments’ overall value.
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Texas’ wireless revenue could see an additional $300-400 million, just from Kindle Fire sales.
See our complete analysis of Texas Instruments here
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