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To: Road Walker who wrote (46994)	2/2/1998 8:16:00 PM
From: Glenn D. Rudolph	Read Replies (2) \| Respond to of 186894

National Semiconductor tumbles on earnings warning Reuters Story - February 02, 1998 19:15 %DPR %ELC NSM V%REUTER P%RTR (Updates stock price, adds analysis) By Therese Poletti SAN FRANCISCO, Feb 2 (Reuters) - Shares of National Semiconductor Corp. tumbled Monday after it said its third-quarter earnings would fall below Wall Street expectations, prompting a number of analysts to cut their estimates for the computer chip maker. The Santa Clara, Calif.-based company said sales and earnings for its fiscal third quarter were expected to decline from the second quarter, due in part to uncertainties in Asia and slowing orders from customers who sell to that region, particulary wireless products. National also cited problems in getting processors at its recently acquired Cyrix Corp. unit to volume production. Cyrix makes clones of Intel Corp. microprocessors. National Semiconductor's stock lost $4.625, or more than 16 percent, to close at $23.50 in consolidated trading on the New York Stock Exchange, where it was the second most actively traded issue. Bill Milton, a Brown Brothers Harriman analyst, said he slashed his estimates for the third quarter to 15 cents a share, from 40 cents previously, and he shaved his total estimate for fiscal 1998, which ends May 31. According to First Call, the consensus estimate on Wall Street was for third-quarter earnings of 39 cents a share, on a diluted basis. "They said about half the shortfall is attributable to Cyrix," Milton said. "The problem is in production, not demand." Currently, International Business Machines Corp. is the only manufacturer of chips for Cyrix, while National is gearing up a new factory in Maine. A National spokesman said the company's fabrication facility in Maine should be producing volume quantities of Cyrix processors by the middle of this year. National also said that, in particular, customers in South Korea have slowed acceptance of deliveries for many products as they review the effects of the current financial crisis. National Semiconductor also said its orders have slowed from its wireless communications customers for analog power management and application specific frequency synthesizer devices used in portable phones sold in Asia. A large portion of this adjustment is inventory-related, the company said, adding that it expects shipments to return to more normal levels by the fourth quarter. Some analysts and traders said that the news was surprising because the company participated in the NationsBanc Montgomery Securities Technology conference last week and did not signal an upcoming earnings shortfall. "They were at Montgomery and they didnt signal this," one technology trader said. He added, however, that some analysts said National's forecast at Montgomery of revenue growth in the high teens to 20 percent range was slower than expected. "Usually, if you surprise people this way, it's one thing," said Mona Eraiba, a Gruntal & Co analyst. "But here it's a bunch of things, not just one." Eraiba said that while many technology companies have been warning about slowing orders due to uncertainty in some Asian markets, they have also said that the shortfalls will be offset by strength in Europe. Eraiba said she was still working on her estimate cuts.