Shares of

National Semiconductor

(NSM)

took a double-digit hit a day after the company issued

lackluster financial results and gave weaker-than-expected guidance for the second fiscal quarter now under way.

It predicted sales will be flat to down 5% sequentially.

In midafternoon trading, the stock was off $1.70, or 11.2%, to $13.50. Semi firms across the board were also suffering losses leading up to

Intel's

(INTC) - Get Report

midquarter update, scheduled to take place after the market close. The

Philadelphia Semiconductor Index

was off 5.1%.

Many of the analysts who cover National Semiconductor, today, chopped their earnings and sales estimates for fiscal year 2003, saying they had expected the company's sales outlook to be better.

"Previously, we had been anticipating sequential growth of 5%, equal to the 10-year seasonal average for the company," said Banc of America analyst Douglas Lee in a research note. But with sales now likely to drop and operating expenses expected to stay flat, he expects a loss in the quarter after two consecutive quarters in the black. His firm hasn't done recent banking for the company.

National Semi saw bookings decline by a painful 11% in the quarter ended recently, due in part to the weak PC market. PC-related sales accounted for about 12% of National Semi's revenue for the quarter.

That trend looks likely to continue, said a report from UBS Warburg. "Our new

lowered earnings estimates reflect little benefit from the usual holiday PC cycle, which we believe is appropriate given the generally weak economy and the failure of the back-to-school season to materialize," wrote analyst Thomas Thornhill. He called the most recent quarter's PC sales "disappointing." UBS Warburg hasn't done banking for NSM.

Orders for flat-panel displays, which accounted for another 12% of National Semi's revenue, were about flat with the prior quarter.

At least wireless, which makes up about 30% of sales, was relatively strong. NSM, which counts at least three of the top five handset vendors as its customers, is gaining dollar content per phone with all of them, noted Thornhill. "Industry trends, such as color screens and integrated cameras which require increasing analog semiconductor content, play to National's strengths and is contributing to NSM's performance," he said.

But despite that pocket of strength, on Thursday, Wall Street fixated on the mostly dreary near-term outlook for the company. "We now expect NSM to remain very near break-even levels for the foreseeable future. Until we see clearer signs of a pickup in end demand (seasonal and/or cyclical), we remain cautious on shares of NSM," advised Deutsche Bank analyst Ross Seymore, who likewise cut fiscal year 2003 sales and earnings estimates. Deutsche Bank hasn't done banking for NSM.