National Semi posts unexpected profit in 1Q

National Semiconductor Corp. (NYSE: NSM) shocked Wall Street Thursday when it reported an unexpected profit in its first quarter. Its shares closed up 1/8 to 32 ahead of the earnings report.

Excluding a $48.4 million one-time gain from the sale of Fairchild Semiconductor stock, the chipmaker posted a pre-tax profit of $1.2 million on sales of $481.8 million.

First Call consensus predicted it would post a loss of 14 cents a share in the quarter.

On a per-share basis, National essentially broke even in the quarter.

After meeting First Call estimates in its fourth quarter, company officials said it expected to return to profitability by the second quarter.

Apparently, National Semi is a bit ahead of schedule.

In the year-ago quarter, it lost $104.8 million, or 63 cents a share, on sales of $470 million.

Including the profits made from the Fairchild stock sale, National raked in $47.1 million, or 25 cents a share.

"Overall market conditions for our industry continued to improve, and we experienced stronger than expected bookings through the summer quarter," said CEO Brian Halla in a prepared release. "In addition, we completed our exit from the PC processor business with the sale of that portion of the Cyrix business last week."

Halla said it expects revenue growth of between 7 percent to 9 percent in its second quarter and gross profit margins of at least 40 percent.

"For those who hung with us thank you," Halla said. "For those of you that have just joined us it's a good time. Enjoy."

Company officials said its first quarter bookings grew 12 percent over last year's first quarter in spite of negative bookings in this quarter for discontinued Cyrix PC processors. Excluding Cyrix PC processor orders, bookings grew 38 percent over last year, and also showed improvement over the fourth quarter.

Sales improved throughout all regions, especially in Japan.

National shares moved up to a 52-week high of 32 3/16 this week after falling to a low of 7 7/16 in October.

Sixteen of the 19 analysts following the stock rate it either a "buy" or "strong buy."