March 8, 2001–Santa Clara, California–National Semiconductor Corp. (NEC) today reported net income of $48.9 million, or 27 cents per share, on revenues of $475.6 million for the third quarter of fiscal 2001, which ended February 25, 2001. This excludes a pretax charge of $12.1 million for in process R&D related to the acquisition of innoCOMM during the quarter. Including that charge, the company reported net earnings of $39.2 million, or 21 cents per share.
In a weak overall semiconductor market, National maintained profitability by achieving gross margins of 49% during the third quarter. Margins benefited from the increasing number of proprietary analog products in the company’s product mix, which are less vulnerable to price erosion, and from National’s ability to maintain manufacturing efficiencies. “We will continue to focus on profitability and critical investments during this period of slower demand and inventory corrections in the wireless handset and PC markets,” says Brian L. Halla, president and chief executive officer.
During the quarter, National completed the acquisition of innoCOMM, a privately held analog design company that is a leading developer of chipsets for wireless networking applications. This acquisition strengthened National’s intellectual property and market position in the wireless sector, especially in high-end wireless RF capabilities including home networking and Bluetooth technologies.
“Although we saw bookings and turns orders improve in February, we are still maintaining a cautious outlook,” Halla reports. Turns orders are orders requested for delivery in the same quarter.
The company reports that third quarter worldwide bookings declined 30% sequentially from the second quarter of fiscal 2001, and 38% compared to the robust bookings of the previous year’s third quarter. After 3 months of sequential declines through January, bookings grew in February.
“We now anticipate a slight sales decline in the fourth quarter,” says Halla. “However, we expect total fiscal year 2001 sales to marginally exceed last year’s revenues of $2.1 billion. Going forward, our goal is to maintain profitability, control costs, and continue investing in targeted high growth markets that will give shareholders the best rate of return.”
For its fourth quarter outlook, the company expects sequential sales to decline by as much as 10%. Gross margins also may decline around 5 percentage points, due to lower factory utilization. These factors may result in earnings of 3 to 5 cents per share.