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To: Mani1 who wrote (57264)	5/5/1999 8:08:00 AM
From: Cirruslvr	Read Replies (1) \| Respond to of 1573898

National Semiconductor to Exit PC Processor Business Company Will Intensify Focus on Information Appliance and Analog Businesses SANTA CLARA, Calif.--(BUSINESS WIRE)--May 5, 1999--National Semiconductor Corporation® (NYSE:NSM - news) today announced its intention to exit the PC processor business in order to sharpen the company's focus on the emerging information appliance market and on its traditional analog business. In a related action, National said it intends to sell a majority interest in its South Portland, Maine, wafer fabrication plant. The company also announced it will eliminate 550 positions through early retirement, attrition and layoffs, including 165 job cuts in Singapore announced in April. This represents less than 5 percent of worldwide employment. As a result of exiting the PC processor business and related support activities plus the work force reduction, but not including disposition of the fab, National expects to take a one-time charge of from $250 to $300 million in its current fiscal 1999 fourth quarter, which ends May 30, 1999. The company is engaged in discussions with potential partners for the South Portland manufacturing facility and the final impact of that action on fourth quarter results depends on the outcome of those discussions. ''We will immediately cease slugging it out in the PC processor market, which has been dragging down our financial performance for several quarters,'' said Brian L. Halla, chairman, president and CEO of National. ''By contrast, the information appliance market is now on the launch pad. Its growth will be fueled by delivering Internet connectivity with push-button simplicity to office, home and mobile users. This market is characterized by low-power fan-less systems, optimized for Web access, which is exactly what our highly integrated processors are designed for. Easy-to-use human interfaces also require analog technology, which is National's heritage.'' Since its acquisition of Cyrix Corporation in November 1997 National has marketed two lines of x86 processors. National will exit its PC-socket-compatible microprocessor line. National will retain and reinforce its integrated processor line, including the Cyrix MediaGX(TM) that is being widely adopted in such information appliances as interactive set-top boxes, thin-clients, thin-servers and portable Web devices. National's processor roadmap for this market extends from the MediaGX through fully integrated system-on-a-chip versions that will include graphics, video, and communication functions. National's analog business has market leadership in many building-block products and subsystems. The analog semiconductor market is forecast by Dataquest to grow at a compound annual growth rate in the mid-teens and National expects to outgrow the market, introducing more than 100 new products this fiscal year. Analog (including wireless) products represent approximately 70 percent of National's fiscal 1999 sales through the third quarter, excluding Cyrix M II processor sales. The company said there is now a fully developed foundry infrastructure available to provide it with leading-edge process technology and cost-effective manufacturing capacity going forward. The company intends to sell a majority share of its 0.18 micron South Portland fab into this infrastructure, securing a source for silicon through partnership or other relationship with the buyer. ''We will leverage our asset in South Portland,'' said Halla, ''and we will ensure a continuous supply of product to our customers throughout the transition and thereafter.'' National said it will continue to supply silicon to the PC motherboard market, including analog building blocks as well as the company's family of SuperI/O peripheral products. After exiting the PC processor business and selling a majority ownership in the South Portland fab, National expects its ongoing business to outgrow the market. The company said it expects its FY 2000 sales to increase over fiscal 1999's as double-digit growth in the analog and information appliance markets offsets the eliminated PC processor sales. Gross margins are expected to return to the mid-40s as a percentage of sales, due to an improved product portfolio mix and better utilization of remaining manufacturing facilities. Operating expenses are expected to drop 20 percent from current run rates and approach company targets of research and development as 15 to 16 percent of sales and SG&A around 12 to 13 percent of sales. Upon completion of this restructuring, the company expects to return to profitability in its fiscal 2000 second quarter, ending Nov. 28, 1999. This outlook contains forward looking statements dependent on a number of risks and uncertainties including such factors as, but not restricted to, new orders received and shipped during the remainder of the fourth quarter, the timely transfer of new submicron production facilities, the timely exit of the PC-compatible processor business, the degree of factory utilization, the successful sale of existing inventories, and the ramp up of recently introduced products. Other risk factors are included in the company's 10-Q for the quarter ended February 28, 1999 (see the Outlook section of Management's Discussion and Analysis of Results of Operations and Financial Conditions). biz.yahoo.com