UPDATE - National Semiconductor profit rises in first qtr
Thursday September 4, 7:34 pm ET
By Elinor Mills Abreu
(Updates with analyst comment, Intel outlook, background, adds after-hours stock price)
SAN FRANCISCO, Sept 4 (Reuters) - Chipmaker National Semiconductor Corp. (NYSE:NSM - News) on Thursday posted a sharp gain in quarterly profit on almost flat revenue, as a result of cost cutting, market share gains, higher selling prices, and higher factory utilization.
[Harry: I am not sure I like the flat revenue. It would indicate overall unit sales declined.]
For the current quarter, the Santa Clara, California company forecast revenue gains of 4 percent to 7 percent from the August-ended quarter, pegging sales at the high end of Wall Street estimates.
The results came amid positive news from other chip makers, retailers and analysts signaling a tech recovery, partly driven by strong sales of computers to consumers.
"Clearly, what their guidance reflects is some strength in the environment," said Dan Scovel of Needham and Co. "Other factors, such as their restructuring and gain in market share, those are specific to them."
The company, whose shares gained 11 percent on Thursday, said net profit in the fiscal first quarter, which ended Aug. 24, was $29.7 million, or 15 cents a share, compared with $1.3 million, or 1 cent a share, a year earlier.
Revenue rose slightly to $424.8 million from $420.6 million a year earlier. The chipmaker had said in June it expected first-quarter revenue to be flat to down 4 percent from fourth-quarter sales of $425.3 million.
Analysts, on average, had expected the company to post earnings per share of 12 cents on revenue of $417.8 million, according to Reuters Research, a unit of Reuters Group Plc.
National Semiconductor President and Chief Executive Brian Halla said there were signs that the market was improving, although he refrained from saying the chip industry was seeing a broad-based recovery.
NOTEBOOKS, HANDSETS DRIVING GROWTH
"The order patterns of our key customers suggest they may be seeing signs of a recovery," particularly with notebook computers and feature-laden handsets, he said in a telephone interview. "There are markets that are driving semiconductor output that truly are starting to recover."
Excluding charges related to severance, asset impairments and accounting changes, the company would have posted profit of $34.7 million, or 18 cents a share.
The company, which competes with Texas Instruments Inc. (NYSE:TXN - News) and STMicroelectronics (Paris:STM.PA - News), undertook a restructuring this year that included shedding some units.
That included selling to Advanced Micro Devices Inc. (NYSE:AMD - News) its Information Appliance unit, which made the Geode microprocessors for use in small, low-cost networked computers, set-top boxes and other devices, last month.
[Harry: So how much of the EPS that beat estimates is a one time gain? The 4 percent q-q projected revenue increase for next q would indicate they think the growth is sustainable.]
National Semiconductor is focusing on selling analog chips that convert voice and visuals into digital signals in cell phones, digital cameras and computer displays.
"It was a great quarter and clearly the company's execution has been extremely good," said Mark Edelstone of Morgan Stanley. "I think this is the start of much better things to come for them."
Other chip companies have also recently signaled that conditions are improving, following a three-year downturn, the industry's worst ever.
Also on Thursday, Intel Corp. (NasdaqNM:INTC - News), the world's largest chip maker, gave a bullish third-quarter revenue forecast range of $7.6 billion and $7.8 billion.
Earlier in the week, the Semiconductor Industry Association said global chip sales rose 2.9 percent in July from June and 10.5 percent from a year ago.
Shares of National Semiconductor closed up $3.17, or 11 percent, at $31.99 in active trade on the New York Stock Exchange (News - Websites), where it was among the top net gain leaders. It rose to $32.02 in after-hours trade. Shares of Intel rose to $29.05 in after-hours trade from a Nasdaq close of $28.50.
[Harry: This report confirms the raised guidance of INTC. It looks like PC are re-bounding finally. Given that PC still account for more than 50 percent of electronic sales, this is a big deal and necessary for any economic recovery.] |
