National Semiconductor, Good But Maybe Not Enough (NSM, SMH)

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National Semiconductor (NYSE:NSM) posted $0.30 EPS on revenues of $471.5 million versus analyst targets of $0.25 EPS on revenues of $467.4 million (on items).  The company is guiding sales up 4% to 7% or an implied range of $490.36 to $504.5 Million, which compares to analyst estimates of just under $496 million. 

National Semi said its sales growth in the first quarter was on increased demand for new analog products, primarily in the wireless handset and portable device markets. Bookings rose by 6% sequentially and gross margin increased to 63.0% and it trimmed inventories by about $10 million.  Gross margin is expected to improve while operating expenses are also projected to increase.

As part of the cumulative $2.4 Billion share repurchase program, the company executed $1.5 billion of the approved buy back through a leveraged accelerated share repurchase program, financed through a combination of unsecured bonds and bank facilities. National Semi’s weighted average shares was 283.9 million shares, down from 327.5 million shares in the preceding quarter. As of the end of the first quarter of fiscal 2008, National had approximately $880 million still available under approved programs for future stock repurchases.

Shares were halted for the news, but after re-opening shares are down over 2% at just under $26.00.  Shares closed up $0.08 at $26.58 in normal trading and the 52-week range is $21.65 to $29.69.  Unless there are some major surpises in the conference call that "non-directional chart" is likely to continue.

The Semiconductor HOLDRs (AMEX:SMH) are down 0.8% now that National Semi has resumed trading.

Jon C. Ogg
September 6, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.