Paul McWilliams ranks among the most savvy technology analystsl here, he turns his analysis to the latest earnings report from chip-maker Texas Instruments (NYSE: TXN).

In his Next Inning newsletter, the advisor explains, "The first quarter results just released by Texas Instruments were clearly not what we might call a thing of beauty, but they were also at least equally distant from ugly." Here is his review.

"Revenue performance at the company was uninspiring and, on a sequential basis, fell more than normal seasonal expectations. However, it was in line with TXN's adjusted guidance and up year over year.

"The gross profit margin held reasonably well sequentially (within expectations) and showed a nice year-over-year improvement; this lead to gross profit dollars posting better year-over-year growth than revenue.

"The good news is that operating expenses as a percentage of sales decreased year over year. The bottom line here is that the long-term trend is healthy, but the short-term trend is telling us we should stay vigilant.

"Operating profit dollars increased at over 4.5 times the rate revenue increased year over year. This is a very important and healthy long-term trend. However, there is a short-term caution flag due to the size of the sequential decrease, which is over 2x revenue change.

"On a year-over-year basis, operating profit per fully diluted share increased nearly ten times as much as revenue; this is a very good long-term indicator. However, again the sequential change is yet another sign we need to keep an eye on how TXN performs going forward.

"Stock-based compensation as a percentage of gross profit dropped noticeably on both a sequential and year-over-year basis. This is always a welcome sign.

"A pleasant surprise though is the fact that TXN had significant enough cash earnings in Q1 to allow it to continue purchasing shares and, at the same time, increase net tangible value per share.

"Essentially I think there are two negative factors affecting TXN right now. The first is that aggregate handset sales are softer than the seasonal norm. The second is that customer preferences are tilting towards lower end handsets.

"In my view, both of these are attributable to consumers feeling the pinch of higher energy and food costs and, as such, should be expected. However, the growth TXN has posted in high performance analog continues to support the contention that TXN is leveraging its strength well.

"It also supports the case that TXN operating metrics remained strong supports the belief that TXN has developed a business model that will likely continue to produce strong profitability even if there is further weakening in demand. Based on this view, I think TXN merits consideration at its current sub-$29 price."