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Nat Semi earnings fall but top forecasts
Gross margins rise on better sales of high-end products; stock rallies 6 percent.
September 8, 2005: 2:01 PM EDT

NEW YORK (CNN/Money) - National Semiconductor Corp., makers of computer chip components, Thursday reported quarterly sales and earnings fell from the same period last year, but beat estimates -- news that sent its stock higher.

Nat Semi said sales fell 10 percent to $493.8 million in its first fiscal quarter from a year earlier, as earnings declined to 24 cents a share from 31 cents.

Net income was $85.6 million for the quarter, down from $117.7 million a year earlier.

But the results beat the expectations of Wall Street analysts, who had predicted an average 21 cent-a-share profit and $464.5 in revenue, according to Reuters.

National Semi also achieved a record 56.2 percent gross margin -- a key measure of profitability -- on increased sales of higher-end products.

"Our business was stronger than expected in the first quarter," said Brian L. Halla, National's CEO. "Overall, we're seeing strong demand for analog products, particularly from our wireless and flat panel display customers."

The Santa Clara, California-based company also issued a bullish forecast on sales -- predicting sales of approximately $518 million for the upcoming quarter. Analyst surveyed by Thomson had predicted a range of between $476 and $505 million in revenue.

The company made two major divestitures earlier this year, selling its PC Super I/O Business and its European cordless business unit to separate buyers, saying they were not in line with its core business model.

Nat Semi (up $1.54 to $26.15, Research) shares jumped 6 percent on the New York Stock Exchange.

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