Chipmaker

National Semiconductor

(NSM)

reported a sharp increase in its third fiscal -quarter earnings Thursday, easily beating Wall Street expectations. The strong earnings were helped by increasing sales of analog chips for use in cell phones and other wireless devices.

For the three months ending Feb. 27, National Semiconductor posted net earnings of $99.8 million, or 51 cents a share. The numbers represent a major increase from its net loss of $27.2 million, or 16 cents a share, for the year-ago period.

That beat the consensus of analysts surveyed by

First Call/Thomson Financial

, which had forecast earnings of 45 cents a share.

The Santa Clara, Calif.-based company's biggest revenue gains were in sales of chips that help regulate and conserve battery power and amplify volume in wireless phone handsets.

Analysts were impressed by the company's results. They say that the company's restructuring and its knack for jumping on hot opportunities, such as the booming cell phone and network appliances markets, has returned National Semiconductor to solid profitability.

Despite the strong results, investors sold shares of National Semiconductor. The stock closed down 4, or 4.9%, at 78 1/2.

The selloff was likely a result of profit-taking by investors following the news, said Richard Whittington, analyst at

Banc of America Securities

. He noted that other chipmakers, such as

Advanced Micro Devices

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(AMD) - Get Report

, have seen similar immediate selling following strong earnings reports recently. Whittington also added that the stock is likely to rebound in the near term.

The stock has risen nearly tenfold from its low of 8 7/8 in April 1999.

Analysts also applauded the company's move last year to exit its chip business for personal computers, where it failed to compete with chipmaking giants

Intel

(INTC) - Get Report

and AMD.

"It's really just a great earnings report all around," Whittington said. "This is just another piece of the great run that chipmakers have been having."

The results do not include a one-time net gain of $228 million, due mainly to the company's sale of its interest in

Fairchild Semiconductor

. The company also inked an additional one-time credit for completed restructuring, and a one-time charge related to its acquisition of

Algorex

.

After one-time items, the company had net income of $327.8 million, or $1.68 per share.

"This quarter represents another positive step toward realizing our true earnings potential," President and Chief Executive Officer Brian L. Halla said in a release.

He added that the company's new products in wireless, communications, information appliances and networking will continue to boost earnings. The company expects to show continued improvement in revenue and earnings for its fiscal fourth quarter as well.