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National Semiconductor Reports Results for Second Quarter Fiscal 2009

Q2 sales were $422 million, down 9% from Q1 of fiscal 2009 and down 15% from Q2 of fiscal 2008

Gross margin percentage of 65.6%, down from 66.0% in Q1 and up from 64.4% in last year’s Q2

Diluted EPS of 14 cents, down from the 33 cents reported in Q1 of fiscal 2009 and the 33 cents in last year’s Q2

Sales outlook for Q3 of fiscal 2009 expected to be down approximately 30 percent

Dec 8, 2008

Dec. 8, 2008 - National Semiconductor Corp. (NYSE:NSM) today reported sales of $422 million and net income of $34 million, or 14 cents per diluted share, for the second quarter of fiscal 2009, which ended Nov. 23, 2008.  In National’s first quarter of fiscal 2009, the company reported $466 million in sales, $80 million in net income and 33 cents per diluted share.  Gross margin of 65.6 percent in National’s second quarter of fiscal 2009 was down from the 66.0 percent gross margin achieved in the first quarter of fiscal 2009.

Compared to last year, sales decreased approximately 15 percent from the $499.0 million reported in the second quarter of fiscal 2008, and earnings per diluted share declined from the 33 cents recorded one year ago.  Gross margin increased from the 64.4 percent reported in the second quarter of fiscal 2008.

Notable Items in Q2, Fiscal 2009 Results
Included in second quarter fiscal 2009 results were approximately $28 million of pre-tax severance and restructuring expenses related primarily to a previously announced action, and approximately $7 million of discrete income tax expenses, which consisted primarily of a write-down of foreign deferred taxes, offset partially by tax benefits associated with the recent restoration of the federal R&D tax credit. 

Bookings for Q2, Fiscal 2009
During the second quarter of fiscal year 2009, total bookings decreased by 33 percent compared to the first fiscal quarter.  New order rates fell significantly from customers in the wireless handset market (which represents about one third of National’s sales) as well as from distributors, which service a large number of customers across a broad range of industries and markets.  Regionally, the second quarter bookings decline was most prominent in Asia Pacific and Europe.  Total company billings exceeded bookings in the second quarter.

Outlook for Q3, Fiscal 2009
National anticipates that sales in the third quarter of fiscal 2009 will be down sequentially by approximately 30 percent depending on turns orders received in the quarter.  The sales outlook is being impacted by significantly lower-than-usual demand levels in the post-holiday season, especially for personal mobile devices.  In addition, the company expects gross margins to decline as the company plans to significantly lower its manufacturing activity in the third quarter of fiscal 2009.

Stock Repurchase and Cash Balances
During the second quarter of fiscal 2009, the company repurchased approximately $23 million of stock under its stock buyback program.  As of the end of the second quarter of fiscal 2009, National had approximately $127 million of authorization still available under an approved program for future stock repurchases.  National Semiconductor’s fully diluted weighted average share count for the second quarter of fiscal of 2009 was 234 million shares, down from 241 million shares in the first quarter of fiscal 2009.  The company ended the second quarter of fiscal 2009 with approximately $786 million in cash and cash equivalents which was up from the approximately $693 million that the company had at the end of the previous quarter.

Dividend Declaration
The company had previously announced on September 25, 2008 that the Board of Directors had declared a cash dividend of $0.08 per outstanding share of common stock and that the dividend will be paid on Jan. 5, 2009 to shareholders of record at the close of business on Dec. 15, 2008.

Special Note
This release contains forward-looking statements dependent on a number of risks and uncertainties pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Except for historical information contained herein, the matters set forth in this press release, including management’s expectations regarding future performance, are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements.  Potential risks and uncertainties include, but are not restricted to, such factors as new orders received and shipped during the quarter, the degree of factory utilization, the sale of inventories at existing prices, and the ramp up and sale of new analog products.  Other risk factors are included in the Company's Annual Report on Form 10-K for the fiscal year ended May 25, 2008 under the captions “Outlook”, “Risk Factors” and “Management's Discussion and Analysis of Financial Conditions and Results of Operations” contained therein and the 10-Q for the quarter ended Aug. 24, 2008.

About National Semiconductor
National Semiconductor creates energy-efficient analog and mixed-signal semiconductors.  Its PowerWise® products enable systems that consume less power, extend battery life, and generate less heat.  Headquartered in Santa Clara, Calif., National reported sales of $1.89 billion for fiscal 2008 which ended May 25, 2008.  Additional company and product information is available at www.national.com.

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