National Semiconductor Corp., a leading maker of semiconductors for cell phones and wireless devices, reported break-even results in its first quarter, which was far better than analysts expected.
The company said Thursday that it had made a profit of US$47.1 million, or $0.25 a share, for the fiscal first quarter ended 29 August, including a gain for the sale of shares of Fairchild Semiconductor stock. National Semi lost $104.8 million, or 63 cents, during the same period a year before.
See also: National Semi Quits the Field- - - - - -
Excluding the gain, National Semiconductor had a pretax profit of $1.2 million, or about break-even on a per-share basis in the first quarter, said company spokesman Bill Callahan.
The company was forecast to post a loss of 14 cents a share, according to First Call/Thomson Financial, which tracks analyst forecasts and company results.
Just last week, National Semiconductor completed the sale of its Cyrix PC microprocessor division to Taiwan's VIA Technologies after an ill-fated effort to compete against Intel. Now, National Semi is focusing on its strongest business -- analog chips -- sales of which are booming because of the growth of wireless phones and strong personal computer sales.
"They've certainly eliminated those parts of the business that were hemorrhaging the worst and what's left happens to be enjoying a huge boom," said analyst Drew Peck at SG Cowen. "National Semi is now in a much better place."
The company, headquartered in Santa Clara, California, also said it was ahead of schedule in returning to profitability and that orders during the normally slow summer quarter were stronger than expected. Company officials expect sales in the second quarter to rise 7 to 9 percent from the first quarter's $463 million, which excludes $19 million in Cyrix sales.
National Semi shares rose 13 cents to $32 in composite New York Stock Exchange trading on Thursday.
"The company is positioned almost exactly at where we've been driving for the past several years," said Brian Halla, National Semi's chairman and CEO.
Halla has long advocated the creation of a "PC on a chip," a device that combines different functions formerly performed by multiple chips on a single chip.
His company's effort on that front is beginning to bear fruit. The PC-on-a-chip strategy was one reason Halla agreed to pay $388 million for Cyrix in 1997, but analysts said the company underestimated Intel's resolve in not losing marketshare.
Now, though, Halla said that IBM will showcase a stripped-down terminal using National's multi-function chip, called the Geode, at an upcoming trade show.
The device is essentially a dumb terminal compatible with Microsoft's Windows software.
Copyright 1999 Reuters Limited.
