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December 09, 2010, 8:26 PM EST
By Ian King
(Updates with CEO’s comments in sixth paragraph.)
Dec. 9 (Bloomberg) -- National Semiconductor Corp., a maker of chips that control power in electronic devices, forecast third-quarter sales lower than analysts’ estimates, citing weaker-than-expected demand from mobile-phone makers.
Revenue will be $344 million to $359 million, Santa Clara, California-based National Semiconductor said in a statement. That compares with $382.3 million, the average estimate of analysts surveyed by Bloomberg. Shares fell 4.1 percent in extended trading.
Demand from handset manufacturers is lower than usual in the run-up to year-end holidays, and distributors of National Semiconductor chips are reducing inventory, the company said. The decrease in stockpiles may be a sign chip resellers are more pessimistic about demand from their customers, said Mahesh Sanganeria, an analyst at RBC Capital Markets in San Francisco.
“This is not an environment where things are growing gangbusters,” said Sanganeria, who has an “underperform” rating on National Semiconductor. “If distributors are taking down inventory, there are definitely some concerns.”
National Semiconductor’s prediction contrasts with that of larger rival Texas Instruments Inc., which earlier this week said demand for chips used in smartphones and communications gear has improved.
The weakness in the mobile-phone market is in cheaper handsets, rather than smartphones, National Semiconductor Chief Executive Officer Donald Macleod said in an interview.
‘Muted’ Growth
Chip distributors that let inventories pile up earlier this year to ensure they’d have enough supply are now letting the stockpiles run down, he said.
“We’re seeing positive markets but the growth rate is muted,” said Macleod.
The midpoint of National Semiconductor’s sales prediction indicates a decline of about 10 percent from the preceding three months. Analysts had been expecting a decline of about 5 percent, Sanganeria said.
National Semiconductor said orders decreased 24 percent in the three months that ended Nov. 28 from the preceding period.
Net income in the fiscal second quarter rose 78 percent to $83.5 million, or 34 cents a share, from $47 million, or 20 cents, a year earlier. Sales gained 13 percent to $390.4 million.
The stock fell to $14.36 in late trading, after the report was released. It had risen 23 cents to $14.97 by 4 p.m. in New York Stock Exchange composite trading. National Semiconductor has declined 2.5 percent this year.
--Editors: Tom Giles, Elizabeth Wollman.
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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(Updates with CEO’s comments in sixth paragraph.)
Dec. 9 (Bloomberg) -- National Semiconductor Corp., a maker of chips that control power in electronic devices, forecast third-quarter sales lower than analysts’ estimates, citing weaker-than-expected demand from mobile-phone makers.
Revenue will be $344 million to $359 million, Santa Clara, California-based National Semiconductor said in a statement. That compares with $382.3 million, the average estimate of analysts surveyed by Bloomberg. Shares fell 4.1 percent in extended trading.
Demand from handset manufacturers is lower than usual in the run-up to year-end holidays, and distributors of National Semiconductor chips are reducing inventory, the company said. The decrease in stockpiles may be a sign chip resellers are more pessimistic about demand from their customers, said Mahesh Sanganeria, an analyst at RBC Capital Markets in San Francisco.
“This is not an environment where things are growing gangbusters,” said Sanganeria, who has an “underperform” rating on National Semiconductor. “If distributors are taking down inventory, there are definitely some concerns.”
National Semiconductor’s prediction contrasts with that of larger rival Texas Instruments Inc., which earlier this week said demand for chips used in smartphones and communications gear has improved.
The weakness in the mobile-phone market is in cheaper handsets, rather than smartphones, National Semiconductor Chief Executive Officer Donald Macleod said in an interview.
‘Muted’ Growth
Chip distributors that let inventories pile up earlier this year to ensure they’d have enough supply are now letting the stockpiles run down, he said.
“We’re seeing positive markets but the growth rate is muted,” said Macleod.
The midpoint of National Semiconductor’s sales prediction indicates a decline of about 10 percent from the preceding three months. Analysts had been expecting a decline of about 5 percent, Sanganeria said.
National Semiconductor said orders decreased 24 percent in the three months that ended Nov. 28 from the preceding period.
Net income in the fiscal second quarter rose 78 percent to $83.5 million, or 34 cents a share, from $47 million, or 20 cents, a year earlier. Sales gained 13 percent to $390.4 million.
The stock fell to $14.36 in late trading, after the report was released. It had risen 23 cents to $14.97 by 4 p.m. in New York Stock Exchange composite trading. National Semiconductor has declined 2.5 percent this year.
--Editors: Tom Giles, Elizabeth Wollman.
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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