Elliott Investment Management L.P. announced on Tuesday that it has submitted a letter to the Board of Texas Instruments Inc. (TXN), urging the company to implement a dynamic capacity-management strategy and establish a free cash flow per share target of over $9.00 by 2026. This proposed target is approximately 40% higher than current investor expectations.
Elliott Investment has disclosed a stake exceeding $2.5 billion in Texas Instruments. The letter, representing Elliott Associates, L.P. and Elliott International, L.P., expressed concerns that Texas Instruments appears to have strayed from its long-standing commitment to increasing free cash flow per share. The shareholders have been left with limited visibility or guidance from Texas Instruments regarding when free cash flow per share will return to its historical trend. Furthermore, it appears that Texas Instruments is developing capacity far beyond anticipated demand, targeting a revenue capacity of $30 billion by 2026, which equates to a 50% excess capacity compared to consensus revenue expectations.
