Micro chipmaker National Semiconductor cut its quarterly revenue forecast yesterday because of sluggish shipments to distributors, sending its stock down 2%.
National Semiconductor said it now expected revenue for its third fiscal quarter ending 25 February would fall by 14% to 15% from the second quarter. The company had previously expected revenue to fall 8% to 11%.
It was the fourth straight quarter National Semiconductor has warned on revenue or issued a disappointing forecast as the company struggles with weak demand that has also hit the broader industry.
However, National Semi also said it had not changed its quarterly gross margin forecast of 58% to 59%.
"It is starting to stick out that they would be this wrong this many times," said Robert Burleson, an analyst with Think Equity Partners.
"But in terms of what investors are thinking about, they are looking at the fact that gross margin guidance was reiterated ... and that's a positive."
With second-quarter revenue of $501.6 million, the new outlook would put third-quarter revenue in the range of $426.4 million and $431.4 million.
Inventory correction cycle
National Semi said its lower forecast was driven mainly by lower-than-expected shipments to distributors, especially in the Asia Pacific region.
It said resale activity by distributors during the year-end holiday season was lower than anticipated, and that shipments of display products were also sluggish.
"This is one of those things where as they come to a trough in the inventory correction cycle, companies can feel a bit more volatility," said Burleson, who rates National Semi shares a "source of funds", one step up from "sell".
National Semi shares fell 2.1%, to $22.83, in extended trading after the warning. In regular trading on the New York Stock Exchange, the stock fell 1.3%, to close at $23.32.
Global sales of microchips are expected to rise about 10% this year, accelerating from about 9% last year as chips make their way into more consumer devices, according to the Semiconductor Industry Association.
Consumer electronics are a key market for National Semi's portfolio of chips that regulate battery life, process digital audio signals and go into display screens.
National Semi, which competes against the likes of Texas Instruments, Analog Devices and Maxim Integrated Products, has seen its stock fall more than 15% over the past year.
That compares to a rise of almost 3% for the Philadelphia Stock Exchange's semiconductor index.
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