Updated from 10:09 a.m.SAN FRANCISCO -- National Semiconductor's ( NSM) fiscal third quarter wasn't particularly pretty, and the company is bracing for further sluggishness in demand. The Santa Clara, Calif., chipmaker said Wednesday that it will slash 26% of its workforce in response to economic conditions, cutting more than 1,700 jobs. Nat Semi's chairman and CEO, Brian L. Halla, put it quite succinctly in a press release: "The worldwide recession has impacted National's business as demand has fallen considerably." The company's stock was down 27 cents, or 2.3%, to $11.43 in recent trading. The demand dropoff was evidenced in the company's third-quarter results. Profit fell to $21.1 million, or 9 cents a share, from $72.9 million, or 29 cents a share, a year earlier. The good news is that beat Wall Street's average expectation for a loss of 5 cents a share. Sales, however, plunged 36% from a year earlier to $292.4 million, essentially in line with analysts' forecasts. For the fourth quarter, Nat Semi said it expects sales to fall by 5% to 10% sequentially as "the company's distribution channel continues to be negatively impacted by the weak economy." That implies revenue of $263 million to $278 million, below analysts' consensus expectations of $292.6 million. As part of its restructuring, the company will cut about 850 positions in product lines, sales and marketing, manufacturing and support functions. In addition, the company will close its assembly and test plant in Suzhou, China and its wafer fabrication plant in Arlington, Texas. The closures will occur over several quarters, eventually resulting in another 875 jobs lost.