By Benjamin Pimentel
NEW YORK (Dow Jones) -- National Semiconductor Corp. on
Wednesday posted a lower third-quarter profit and announced plans
to eliminate more than 1,600 jobs in an effort to cut expenses.
Before the opening bell, the Santa Clara, Calif.-based chip
maker reported that quarterly net income fell to $21.1 million, or
9 cents a share, from $72.9 million, or 29 cents a share, in the
year-earlier period.
Net sales for the three months ended March 1 fell to $292
million from $453 million in the year-ago quarter.
Analysts had expected National Semi (NSM) to report a loss of 5
cents a share, on revenue of $296.8 million, according to a
consensus survey by Thomson Reuters.
Citing current economic conditions, the company set plans to cut
850 positions immediately in product lines, sales and marketing,
manufacturing and support functions. It will also shutter an
assembly and test plant in China and a wafer-fabrication plant in
Texas, resulting in an additional 875 job cuts. These actions
represent a 26% reduction in the company's workforce.
"The worldwide recession has impacted National's business as
demand has fallen considerably," said Brian Halla, chairman and
chief executive officer. "However, the actions we announced today
will help us remain competitive as we continue to focus on growing
markets that can benefit from our new energy-efficiency
initiatives."
National Semi predicted that fourth-quarter sales would decline
sequentially by 5% to 10%.
The company reported results as the chip industry reeled from
one of the most severe downturns in its history, marked by a steep
drop in demand.
Deutsche Bank analyst Ross Seymore said National Semi could
benefit from cost-cutting moves and the expected rebound in
demand.
"We believe National Semi shares can benefit from additional
cost-cutting actions and an eventual cyclical/macro rebound when
the current inventory depletion stage ends," Seymore told clients
in a research note. "We remained concerned regarding National
Semi's ability to produce secular revenue growth, but believe
cyclical factors are likely more important drivers for the next
year."