The bad times aren't going away any time soon for
In keeping with its
warning to the Street last month, the Santa Clara, Calif., chipmaker said Thursday that its revenue and profit both declined in its fiscal second quarter.
And the company projected that sales in the current quarter would be down sharply from analysts' expectations, as bookings in its second quarter plunged 16% sequentially.
That pushed the company's shares down 3.5%, or 88 cents, to $23.92 in extended trading.
National Semi pointed to the continuing inventory build in its distribution channel, which has caused distributors to hold off on chip purchases in recent months.
But National Semi said the slowdown in orders for the current quarter was also driven by lower orders from OEM customers and contract manufacturers, suggesting that a broader malaise may be plaguing its business.
National Semi makes analog chips used in cell phones and displays as well as for industrial and automotive markets.
The company said sales in the three months ended Nov. 26 totaled $501.4 million, compared with $544 million at this time last year. Net income plunged 20% year over year to $91.4 million, or 27 cents a share.
The results were in line with analysts' dampened expectations following National Semi's November preannouncement in which it trimmed its sales and gross margin projections.
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.