In another sign that recovery remains elusive for the chipmaking industry, a profit warning yesterday by National Semiconductor, followed by a downgrade this morning for chip giant Intel, sent the semiconductor sector on a downward trajectory.
National Semi closed today's trading down more than 15 percent at 11.5625, following yesterday's announcement that sales and earnings for the company's first and second fiscal quarters, ending August 30 and November 29, respectively, may be below those for the fourth quarter of fiscal 1998. Bellwether Intel, for which Merrill Lynch today cut its long-term rating to "neutral" from "accumulate," ended the day down nearly 4 percent at 86. Other chipmakers, including Advanced Micro Devices and Micron Technology, also reacted to the news by shedding points.
National Semiconductor said yesterday that it expects sales for the first quarter to fall between 8 percent and 10 percent from fourth-quarter figures, with a larger loss resulting.
"Although new order rates for the current quarter indicate an improvement over the fourth quarter, shipments in the current quarter have been impacted by weakness in overall semiconductor demand, including the personal computer market," the company said in a statement. "These lower shipments and the resulting lower-capacity utilization of wafer fabrication facilities, plus manufacturing transition costs for microprocessors, are expected to increase first-quarter losses."
The company said its losses during the fourth quarter were 42 cents per share, on $510 million in sales.
In July, National Semiconductor said it would furlough all of its workers for ten days sometime between November and December, as the company continued its struggle with weak demand. That move affects all of National's 13,000 workers worldwide.
National previously had laid off some 1,400 employees in April and May, also in an effort to reduce supply.