October 15, 2012 at 11:17 AM EDT
Texas Instruments in Talks With Amazon to Sell Mobile Chip Arm (TXN)

The Israeli financial newspaper Calcalist reported on Monday that Texas Instruments Incorporated (TXN) is in advanced talks to sell the mobile microchip sector of its company to Amazon (AMZN).

The two companies already have a strong relationship; TI is the current supplier for mobile chips to Amazon for its Kindle tablets. The potential purchase would signal the possible entry by Amazon into the smartphone sector. This would add one more competitor into an already competitive smartphone market that includes Apple (AAPL) and Samsung.

Texas Instruments had already announced their desire to exit the market for mobile chips. TI and smaller independent mobile chip manufacturers have been reporting losses in the mobile chip business. Texas Instruments wants to focus their wireless investment on more stable and profitable business like the need for microchips in the automobile industry.

The specifics of the deal have not been released, but many suspect that the deal would bring billions to TI. This might be positive for investors as they will have more cash on hand and cut losses in a struggling and competitive business sector. The benefits could lead to a higher dividend payout.

Texas Instrument’s shares were up 55 cents, or 2.00%, in morning trading on Monday.

The Bottom Line
Shares of Texas Instruments (TXN) have a 2.49% dividend yield, based on Friday’s closing stock price of $27.28. The stock has technical support in the $25 price area. If the shares can firm up, we see overhead resistance around the $29-$30 price levels.

Texas Instruments Incorporated (TXN) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.2 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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