National Semi blows past 1Q forecasts

3 min read

National Semiconductor shattered the Street estimate by 11 cents a share in its first quarter Thursday, posting a profit of $149.4 million, or 76 cents a share, on sales of $640.8 million.

First Call Corp. consensus expected the chipmaker to earn 65 cents a share in the quarter.

National Semi (NYSE: NSM) shares were up 1 7/16 to 45 15/16 shortly after the results were released.

The $640.8 million in sales marks a 33 percent jump from the year-ago quarter when it earned $47.1 million, or 25 cents a share, on sales of $481.8 million.

"National Semiconductor posted another strong quarter of great results," said CEO Brian Halla in a prepared release. "I am also very pleased that our team achieved strong gains in bookings, revenues and profitability."

Gross profit margins improved to 53 percent in the quarter, a tad above most analysts' estimates.

Ahead of the earnings report, Merrill Lynch analyst Joseph Osha reiterated his "near-term accumulate" and "long-term buy" ratings on the stock. He also set a 12-month price target of $100 a share.

Wit SoundView analyst Scott Randall was expecting National to post a profit of 67 cents a share in the quarter and gross profit margins of 52 percent.

"We believe that (National Semiconductor) is benefiting from a robust analog market as well as seeing some recovery in its networking devices," he wrote in a research note.

Company officials said worldwide orders for its analog, wireless and Internet communications devices improved 34 percent from the year-ago period.

It expects to report sequential sales growth of between 6 percent to 8 percent in its second quarter and growth in excess of 30 percent year-over-year.

CFO Don Macleod told analysts during a conference call that the upside surprise in gross profit margins was primarily a result of higher volume and improved manufacturing efficiency.

Macleod said National expects to improve profit margins by 40 to 50 basis points in its second quarter.

"Backlog is where it should be for this quarter," he said. "We're expecting revenue growth for the year somewhere in the mid- to low-30 percent range from the $2.14 billion in fiscal 2000."

Strong reseller sales also helped National this quarter as distributors reported a 43 percent jump in sales from the year-ago quarter.

Last quarter, National Semiconductor easily topped analysts' estimates when it raked in $134.2 million, or 68 cents a share, on sales of $595.3 million.

Separately, National announced Thursday that it will partner with Proxim (Nasdaq: PROX) to develop a variety of wireless home-networking products.

Officials they expect to develop technology that will accelerate wireless home-networking from current speeds of 1.6 megabits a second to more than 10 megabits a second.

Financial terms of the deal were not disclosed.

National Semi shares soared up to a 52-week high of 85 15/16 in March after bottoming out at 23 1/2 in October.

All 15 analysts tracking the stock rate it either a "buy" or "strong buy."

First Call Corp. consensus expects it to earn $2.90 a share in the fiscal year.