National Semi Tops Estimates
Updated from 12:55 p.m. EST
National Semiconductor's
(NSM)
third-quarter financial results topped expectations as a better mix of analog chip sales helped the company offset sequentially flat sales, high inventory and weak factory utilization.
Shares rose 3.7% to $20.73 after the results were announced, edging closer to an eight-month high of $20.65 hit at the start of March.
"At the beginning of the quarter, I said there were signs that the worst was behind us," said CEO Brian Halla. "In fact, the remainder of the quarter played out like that."
For the quarter ended on Feb. 27, National Semi said third-quarter net income fell to $77.4 million, or 21 cents a share, on sales of $449.2 million. During the same quarter last year, the company earned $93.1 million, or 24 cents a share, on sales of $513.6 million.
Analysts had expected earnings of 16 cents a share on sales of $444 million, on average, according to Thomson First Call.
National Semi's net income included a $20 million pretax charge for previously announced job cuts. That charge was mostly offset by a $7 million pre-tax credit and a reduced income tax rate.
Gross margins hit 52.7%, up from 50.6% in the second quarter. The company had targeted margins between 49% and 50%. Gross margins are expected to expand to more than 53% in the current quarter.
Factory utilization fell to the low-60% range from the mid-60% range in the second quarter; inventories dropped to $185.4 million from $201.2 million in the previous quarter; and cost of sales fell 4.2% sequentially to $212.6 million.
Also, the company said third-quarter orders rose 6% sequentially and it has authorized an additional $400 million in stock repurchases.
The company has been cutting costs, slicing 6% of its staff in early January and, earlier Thursday, announcing the proposed sale of a test and assembly factory in Singapore that employs 1,000 workers.
Orders grew in North America and Europe for analog chips from distributors. Turns orders, which represent orders placed and shipped in the same quarter, also improved.
For the fourth quarter, National Semi predicted sales between $458.2 million and $467.2 million for sequential growth of 2% to 4%. Analysts had expected sales of $463 million, right at the midpoint of National Semi's new target range.