Hard Times at National Semi

National Semi said its second-quarter revenue decline was the result of lower shipments to distributors "who, despite experiencing flat resales of National's products, reduced their inventories during the quarter," as well as a $21 million fall-off in foundry services relating to divested businesses.

Gross margin took a hit, as National Semi reduced its wafer fabrication and lowered its inventory by $18 million during the quarter.

"While customer end demand did not demonstrate the seasonal uptick we usually see this time of year, the revenue decline this quarter was driven by inventory reductions at our distributors and some of our customers," National Semi CEO Brian Halla said in a statement.

"Responding to this, we were able to bring down our inventories and still hold gross margins at almost 59%," Halla said.

For the current quarter, National Semi said sales will decrease approximately 8% to 11% sequentially. That suggests a range of between $446.3 million and $461.3 million.

Analysts polled by Thomson Financial expected only a 1% dip in sales to $495 million, with EPS of 27 cents.

National Semi did not provide an EPS estimate but said that its gross margin is expected to slightly decline in the third quarter.