National reports best bookings for three years

National Semiconductor has reported a GAAP profit of $65.8 million, or 34 cents per share, on revenues of $473.5 million for the second quarter of fiscal 2004, which ended on 23rd November 2003.

National Semiconductor has reported a GAAP profit of $65.8 million, or 34 cents per share, on revenues of $473.5 million for the second quarter of fiscal 2004, which ended on 23rd November 2003.

National's sales were 12% higher than the second quarter of fiscal 2003 and 11% higher than the first quarter of fiscal 2004, when the company reported revenues of $424.8 million and earnings of 15 cents per share.

National's second quarter net results included special charges of $6 million for severances and exits of leased facilities in connection with cost-reduction activities.

Without these charges, National would have reported net after-tax income of $71.1 million, or earnings of 36 cents per share.

"Sales are up, expenses are down and our profits doubled from the first quarter.

We are ahead of the goals we set for ourselves", said Brian L Halla, National's Chairman, President and CEO.

"As a result of this, we achieved a 19% return on invested capital in the quarter".

Gross margins increased by 2.9% in the second quarter to 50.1%, up from the 47.2% gross margin reported in Q1 and 42.9% gross margin reported in Q2 of fiscal 2003.

With factory use above 90%, the company continues to drive improvements in product mix and average selling prices.

During the quarter, the company also completed $400 million of stock repurchases under a programme announced in July 2003.

"This was National's strongest bookings quarter in three years", Halla said.

"We saw strength with key customers in vertical markets, as well as in the broad-based distribution markets".

Worldwide bookings increased 29% sequentially in Q2 and 36% year-to-year.

Second quarter bookings significantly exceeded billings.

In National's key product lines, orders for audio and power management products grew substantially more than the company average.

Orders for portable power management products led the company in year-to-year growth and nearly doubled last year's order rate.

The company's bookings were driven by increased demand for notebooks, PCs, displays and wireless handsets as well as strong demand from the distribution channel, where orders increased more than 30% sequentially from Q1.

Geographically, National experienced across-the-globe strength in regional analogue orders with noteworthy gains in North America and Asia Pacific.

In addition to seeing overall strength in bookings throughout the second quarter, National started the third quarter with a higher opening backlog.

National's guidance for the third quarter of FY 2004 is for revenues to grow 3 to 5% sequentially.

Consistent with this growth, gross margins are expected to improve slightly.

The company expects operating expenses comparable to or slightly higher than the second quarter.

Historically, third quarter revenues have typically decreased due to seasonal patterns following the holiday buying season.

The company's third quarter of FY 2004 ends on 29th February 2004 and will include 14 calendar weeks instead of the normal 13 weeks.

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