Wednesday, December 8, 2010

National Semiconductor Corp. (NYSE: NSM): Q2 Earnings Preview 2011

National Semiconductor Corporation (NYSE: NSM) is scheduled to release its fiscal second-quarter earnings after the closing bell on Thursday, December 9, 2010. Analysts, on average, expect the company to report earnings of 32 cents per share on revenue of $399.46 million. In the year ago period, the company reported earnings of 20 cents per share on revenue of $344.60 million.

National Semiconductor Corporation, a semiconductor company, designs, develops, manufactures, and markets analog and mixed-signal integrated circuits and sub-systems. The company markets its products to OEMs and original design manufacturers (ODM) through a direct sales force. Some major OEMs include Apple, General Dynamics, Sony Ericsson, Motorola, Nokia, RIM, Samsung, LG Electronics, Siemens AG.  It has a diversified product portfolio, which includes power management circuits, audio and operational amplifiers, communication interface products and data conversion solutions. During the fiscal year ended May 30, 2010 (fiscal 2010), approximately 94% of National’s revenue was generated from Analog segment products.

In the preceding fiscal first quarter, the Santa Clara, California-based company's net income was $88.8 million, or 36 cents a share, compared to a profit of $29.8 million, or 13 cents a share, in the year-ago quarter. Revenue increased 31% to $412 million. Analysts, on average, expected the company to report earnings of 35 cents a share on revenue of $414.49 million. 

At its last earnings call in September, the company said that it expects second quarter net sales of $390 million to $415 million, which represents flat to a decline of 5% as compared to the first quarter. The company anticipates gross margin percentage in the range of 68% to 70%.

In recent years, National Semiconductor has reorganized its business to focus on high-profit analog chips that control power management in electronic devices, shedding various business lines. A global recovery after the sharp downturn last year also helped, as chip makers produced more chips to refill global inventories. Recently, the Semiconductor Industry Association predicted that worldwide chip sales for 2010 would total $300.5 billion, an increase of 33 percent over 2009 sales. That's more than the group had predicted in June, when it forecast 2010 sales of $290.5 billion.

In terms of stock performance, NSM shares are down nearly 5% since the beginning of the year. 

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