Now that transformation, which was so exciting back then, is the stock market equivalent of ancient history. Texas Instruments, which ended up buying National Semiconductor, is now considered a gross domestic product play, meaning if there is growth in the economy then its orders pick up. If there is no growth it languishes.
Last night Texas Instruments gave you an intraquarter update that showed you the company might be having a growth spurt. Orders are better. Inventories are lean. Things are getting better.
Of course, just like the stock market anticipated the better employment numbers this morning, Texas Instruments had anticipated the turn in orders so it didn't gallop as you might think it would. No matter, Texas Instruments is getting talked about by fund managers who haven't looked at it in ages, and I suspect it will be charging higher soon, breaking out of this long-constraining range, because if things are indeed getting better then the earnings estimates are probably too low. In the interim it has raised the dividend to the point where it yields 3.20%, a nice cushion if it gets hit while you are waiting.
It's the same thing with the telecommunications companies. We are seeing signs of life in JDSU, in Ciena and Cisco (CSCO), as companies that haven't spent a lot of technology of late, such as the giant telecommunications providers are at last spending again. They are making sense, too.In the meantime old software plays, chiefly companies that provide information technology help, like Computer Sciences or Compuware or BMC, are coming back to life as new and inexpensive speculations that have, like Texas Instruments, hope because companies are feeling more confident about spending. It's out with the old and in with the new, and the new, in this case, is overlooked, unloved technology from yesteryear. It's beginning to work, and I suspect it stays working as long as the stocks don't go so high that they are no longer considered cheap any more. Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long CSCO.
Don't 'Go Away' Too Early Posted at 6:41 p.m. EDT on Thursday, March 7 Heard it today for the first time: "We've been here before, we've been up a lot and then given it all back come May."
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