Earnings Preview: National Semiconductor

| About: National Semiconductor (NSM)
National Semiconductor (NSM) is expected to report Q3 earnings Thursday with a conference call scheduled for 4:30 p.m. ET.


The consensus estimate is 24c for EPS and revenue $457.42M, according to First Call. The company negatively pre-announced its F3Q results to be worse than previously expected. Q3 revenues are expected to be down -9% to -10% quarter-over-quarter, in the range of $450M to $455M, versus prior range of down -1% to -5% quarter-over-quarter with incremental weakness due to softness in the company's handset business, which is one-third of revenues. Guidance for the gross margin was approximately 63%, down from 64.4% in Q2.

Analyst Views

Deutsche Bank believes continuing problems at Motorola (MOT) is contributing to the handset weakness at National Semiconductor. Deutsche is currently modeling Q4 GAAP EPS of 27c and revenues of $464M, which is below consensus Street estimates of 29c on revenues of $472.45M. Deutsche said, given the continuing turmoil in the global macro environment they would not be surprised if the company provided a cautious outlook this time around.

Jefferies said recently, that their proprietary channel checks in Asia with respect to RF Micro Devices (RFMD) indicated that distributor inventory continued to build post-Chinese New Year. As such, Jefferies believes National's Q4 guidance may fall short of their estimates of 29c on $472.3M in revenues.

Key focus items for the conference call: Comments and outlook for bookings/billings; gross and operating margin guidance, on Feb.15, national Semi said they expect their gross margin to be above 60% in fiscal year 2008, similar to the previous year; comments on Inventory and lead times; and comments on end-demand.

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