Sales Strong at National Semi

Updated from 1:18 p.m. EDT

National Semiconductor(NSM Quote - Cramer on NSM - Stock Picks) shares rose Thursday after the analog chipmaker reported fourth-quarter sales at the top end of its target range and above Wall Street's expectations.

The stock recently jumped 4% to $20.73, a two-month high.

National Semi improved its bottom line, thanks to higher gross margins and one-time items. Orders increased notably, up 12% sequentially, doubling the order growth rate from the third quarter.

For the quarter ended May 29, National Semi reported net income of $132.1 million, or 36 cents a share, on sales of $467 million. During the same quarter last year, the company earned $94.2 million, or 24 cents a share, on sales of $571.2 million.

Analysts had expected earnings of 22 cents a share on sales of $466 million, on average, according to Thomson First Call. At the start of the quarter, National predicted sales between $458.2 million and $467.2 million for sequential growth of 2% to 4%.

National Semi's net income includes an $86.1 million write-off for goodwill, a $51.1 million gain from a divestiture, a $2.6 million charge due to cost cuts, and a net tax benefit of $55.9 million

Gross margin was 54.7%, compared with 52.7% in the previous quarter and 54.4% in the fourth quarter last year.

Executives said the company was making good progress toward goals of 60% gross margins, 30% of combined R&D and selling, general and administrative costs, and an operating margin of 30%.

Expenses tallied 31.5% of sales and operating margin excluding one-time charges amounted to 23.2% of sales.

For the first quarter, National Semi predicted sales between $457.7 million and $467 million, or flat to down 2%, and flat gross margins. National said the main cause of the weak growth forecast was about $8 million to $10 million in lost sales from two divestitures the company made during the fourth quarter.