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THE DAY AHEAD: National Semi shareholders finally get to cheer

National Semiconductor (NYSE: NSM) did something it hasn't done all that often in the last 15 years -- it delivered stellar results. And now long-suffering shareholders have a few minutes to gloat.

If National Semi keeps this up its shareholders may actually get spoiled. Of course shareholders deserve it -- they have a lot of bad memories. National shares still aren't near their all-time high level of about $40, but could get there soon.

National Semi: Best to come?

After the bell Thursday, National delivered first quarter break-even earnings per share on an operating basis. Wall Street was expecting a loss of 14 cents a share. Revenue was just above estimates at $481.8 million.

The company, which predicted second quarter profits last quarter, is ahead of schedule when it comes to getting back to the black.

It's amazing what a company can do once it stops getting pounded in the PC processor business. As soon as National bailed on its price war with Advanced Micro Devices (NYSE: AMD) and Intel Corp. (Nasdaq: INTC), shares started climbing.

Now the company focuses on the analog chip sector, including the wireless, portable, information appliance and audio markets (see NSM chart). National Semi's first quarter (full statement) was the last with any Cyrix PC processor revenue on deck, but analog sales stole the show.

Analog chips represent 66 percent of National's sales now and the company is reporting "very strong" backlog of orders headed into the second quarter.

The only hiccup for shares may be National Semi's guidance, which seemed a bit too cautious considering the quarter it delivered. Officials said they expected revenue growth of 7 percent to 9 percent and indicated that they were comfortable with estimates. Gross margins are expected to improve throughout the fiscal year.

Considering the first quarter was much better than expected analysts are likely to upgrade earnings estimates and ratings. According to First Call, National Semi is expected to report profits of 6 cents a share, 26 cents a share and 42 cents a share in its second, third and fourth quarters, respectively.

And this time National Semi might actually stay on the right track. The market for thin clients and information appliances is only getting bigger and National Semi counts some heavy-hitters such as Toshiba, IBM and others on its customer list.

Look for more details from National Semi on the fall investment conference circuit and at its shareholder meeting Sept. 24.

For once, the future is looking bright for National Semi. On a conference call, CEO Brian Halla was sensitive to what shareholders have went through with the company.

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