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National Semiconductor Reports Results for Third Quarter Fiscal 2008

Q3 sales were $453.4 million, down 9.1% from Q2 of fiscal 2008 and up 5.2% from Q3 of fiscal 2007

Gross margin percentage of 64.3%, down slightly from 64.4% in Q2 but up from the 59.8% posted in last year’s Q3

EPS of 28 cents, down from 33 cents in Q2 but up from 22 cents in Q3 of fiscal 2007

Sales outlook for Q4 of fiscal 2008 expected to range from $440 million to $460 million

Mar 6, 2008

March 6, 2008 -- National Semiconductor Corporation (NYSE:NSM) today reported sales of $453.4 million and net income of $71.2 million, or 28 cents per share, for the third quarter of fiscal 2008 which ended February 24, 2008.  National’s third quarter of fiscal 2008 results included $19.6 million of pre-tax severance and restructuring expenses related to a previously announced factory modernization effort.  Third quarter results also included approximately $11 million of discrete tax benefits that were recognized in the quarter.

National’s third quarter fiscal 2008 sales decreased 9.1 percent sequentially from the second quarter of fiscal 2008, when the company reported $499.0 million in sales and earnings of 33 cents per share. 

“Our business was impacted by lower-than-expected shipments into the wireless handset and personal mobile device markets; however, our margins held up well,” said Brian L. Halla, National’s chairman and CEO. 

Gross margin of 64.3 percent in National’s third quarter of fiscal 2008 was down slightly from the 64.4 percent gross margin percentage achieved in the second quarter of fiscal 2008.  Notwithstanding the sequential decline in revenues, third quarter gross margin benefited from higher-value product mix as well as manufacturing efficiencies.

Compared to last year, third quarter fiscal 2008 sales were up from the $431.0 million reported in the third quarter of fiscal 2007, and earnings per share were above the 22 cents recorded a year ago.  Gross margin in the third quarter of fiscal 2008 was also higher than the 59.8 percent reported in the third quarter of fiscal 2007 due to improvements in both product mix and manufacturing.

Bookings for Q3, Fiscal 2008
National’s bookings in the third quarter of fiscal 2008 declined sequentially by approximately 14 percent, driven primarily by lower orders for wireless handsets and other personal mobile devices.  Regionally, the third quarter bookings decrease was most prominent in Asia Pacific and Europe. 

Other Notable Items in Q3, Fiscal 2008 Results
Included in third quarter fiscal 2008 results was $22.4 million in pre-tax stock compensation expense under FASB Statement 123(R).  One year ago, the third quarter of fiscal 2007 included $29.5 million of pre-tax stock compensation expense.  Third quarter fiscal 2008 net results also included approximately $11 million of discrete tax benefits.

Outlook for Q4, Fiscal 2008
National anticipates that sales in the fourth quarter of fiscal 2008 will range from $440 million to $460 million.

Stock Repurchase Program
During the third quarter of fiscal 2008, the company repurchased approximately $120 million of stock under its stock buyback program.  As of the end of the third quarter of fiscal 2008, National had approximately $480 million of authorization still available under approved programs for future stock repurchases.  National Semiconductor’s fully diluted weighted average share count for the third quarter of fiscal of 2008 was 255.5 million shares, down from 271.5 million shares in the second quarter of fiscal 2008.

Company Declares Dividend
The company announced that the Board of Directors today has declared a cash dividend of $0.06 per outstanding share of common stock.  This dividend will be paid on April 7, 2008 to shareholders of record at the close of business on March 17, 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 27, 2007 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 November 25, 2007.

About National Semiconductor
National Semiconductor, the industry's premier analog company, creates high-value analog devices and subsystems.  National's leading-edge products include power management circuits, display drivers, audio and operational amplifiers, interface products and data conversion solutions. National's key analog markets include wireless handsets, displays, communications infrastructure, medical, automotive, industrial, and test and measurement applications. Headquartered in Santa Clara, Calif., National reported sales of $1.93 billion for fiscal 2007, which ended May 27, 2007.  Additional company and product information is available at www.national.com.