Analog drives National Semi sales up, company expects continuing growth
Better than expected demand, especially from distributors serving broad industrial markets, pushes National Semiconductor's revenue up 12% sequentially. Questions still remain, however, as to if the good news is the result of a recovery or restocking.
By Suzanne Deffree, Managing Editor, News -- EDN, September 11, 2009
National Semiconductor Corp Thursday afternoon announced sequential gains in revenue and income for its fiscal Q1 2010, attributing much of the growth to better than expected demand for its analog products, especially from distributors serving broad industrial markets.
The Santa Clara, Calif-based company reported sales of $314 million and net income of $29.8 million for the quarter ended August 30.
National’s first quarter sales were 12% higher than sales in the previous quarter, when the company reported $281 million in revenue, but 32% lower than the $466 million reported in last year’s first fiscal quarter.
Net income of $29.8 million, or 13 cents per diluted share, was an increase from the net loss of $64 million and net loss of 28 cents per share in the previous quarter.
Gross margin of 61.1% in National’s August quarter was up from the 58.3% gross margin achieved in fiscal Q4 2009 but down from the record-high 66% gross margin reported in the year-ago quarter. National said the sequential gross margin improvement was due to improved product mix, higher production volume, and benefits realized from sooner-than-expected ceasing of production at National’s assembly and test facility in Suzhou, China.
National’s total company bookings in the quarter increased by approximately 17% sequentially. The increase in overall bookings was driven by higher order rates in North America, Europe, and Japan, the company said, further noting that total company bookings exceeded billings in the fiscal Q1.
Optimistic, but cautious, National CEO Brian Halla commented on the company's fiscal Q1 on a call Thursday afternoon with analysts.
"So the question is was the good news the result of a recovery or restocking? We believe that the answer is a little of both," he said. "While sales were up 12%, bookings were up even higher, giving us a positive book to bill. Overall, company bookings grew 17%. Some of the distributor bookings did go to support the higher opening backlog as orders on National [products] were higher than the channel's resales. This improvement in distributor resales did bolster our confidence in the overall market strength, but we'll continue to watch this and leave the cork in the bottle for now.
"The across the board improvement does give us an indication of recovery, but we will put some time and data in before we can gauge the magnitude," Halla continued. "The broad distributor demand will really determine the overall health of the market. While visibility has improved, it hasn't improved enough to give us clarity on the quarter, beyond the one we're in."
As to the company’s current quarter, National forecast a sales gain of 3% to 8% sequentially for revenue between approximately $325 million and $340 million.
Halla noted the company will also keep a close eye on costs. In March, the company announced plans to cut jobs and consolidate its manufacturing operations as it looks to reduce overall expenses and shift more of its R&D investments toward new and emerging growth opportunities. Halla noted LED lighting solutions on Thursday's call among potential growth areas.
"We will also continue to work on accelerating the penetration of our analog solutions into newer high growth areas such as LED lighting solutions, renewables, personal mobile devices, and medical applications," he said. "Though the numbers just turned in do not reflect major contributions from any of these newer sectors, we are seeing early signs of a strong wrap in our LED lighting drivers and we have received and fulfilled first orders for our SolarMagic power optimizer solutions from Europe, Japan, and the Americas."
