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To: Jon Koplik who wrote (29215)	5/5/1999 12:23:00 PM
From: w molloy	Respond to of 152472

OT - sort of National Semi Exits The PC Chip Sector By Andrew Hay NEW YORK (Reuters) - National Semiconductor Corp. (NYSE:NSM - news) Wednesday said it would exit the cutthroat PC chip business, taking a fourth-quarter charge of up to $300 million charge, as it focuses on chips *for new smart devices.* The charge includes expenses related to a workforce reduction of about 5 percent, covering some 550 jobs. The Santa Clara, Calif., chip maker -- hurt by price wars between rival chip makers Advanced Micro Devices Inc. (NYSE:AMD - news) and Intel Corp. (Nasdaq:INTC - news) -- said it would sell the PC unit at its struggling Cyrix processor business. The company will retain its business making chips for smart information appliances like set-top boxes and other devices used to hook up to the World Wide Web. ''We will immediately cease slugging it out in the PC processor market, which has been dragging down our financial performance for several quarters,'' Brian Halla, chairman, president and CEO of National said in a statement. ''*By contrast, the information appliance market is now on the launch pad.* Wall Street reacted favorably to the news. Shares of National, which supplies chips to Compaq and General Motors for products ranging from cellphones to laptops, were up $1.31 at $16.06 in mid-morning trade. Analysts said National's move to exit the personal computer business marked aggressive price cutting by Intel Corp., the world's largest computer chip maker, at the lower end of the PC market. ''It leads to the conclusion that we're in a two-horse race -- Intel and AMD,'' Needham & Co. analyst A.A. LaFountain said in a telephone interview. National, which has previously had to streamline its business to move into higher-margin chip markets, said it intends to sell a majority interest in its South Portland, Maine, wafer fabrication plant. The company plans to cut 550 positions through early retirement, attrition and layoffs, including 165 job cuts in Singapore announced in April. This represents less than 5 percent of its employees. National will continue to focus on analog products which represented about 70 percent of its fiscal 1999 sales through the third quarter. National expects to take a one-time fourth quarter charge of between $250 to $300 million as it exits the PC processor business and cuts its work force. Upon completion of the restructuring, the company expects to return to profitability in its fiscal 2000 second quarter, ending Nov. 1999.