By William Trent, CFA of Stock Market Beat
UPDATE 2-National Semi profit falls; says trough now past | Reuters.com
National Semi said it expected revenue for its current, fourth fiscal quarter to rise 3 percent to 6 percent from the prior quarter. The Santa Clara, California-based company also saw new orders rise in the quarter, led by bookings from makers of mobile telephones and cellular network equipment, chief executive Brian Halla said.”Almost everybody I talk to sees the same kind of regaining of health of the industry, and most everybody agrees the trough was early in the first quarter,” Halla told Reuters.
To his credit, Halla doesn’t appear to be a perpetual bottom-caller. On the February 25 conference call he said:
We do believe that for us, the bottom of our trough occurred sometime in early January and in fact, if we look at the activity since then, bookings picked up and held up at a consistent rate through the end of the quarter. As a result, we are able to realize a positive book-to-bill for the first time in three quarters.
And in the November conference call he said:
Margin improvement has been a focus we have discussed for a few years at these calls, and now given this current trough where less than 60% of our factories are utilized, the portfolio impact on our margins is starting to speak for itself. And by the way, our short-term goal of hitting 65% gross margin is still on the table.
So he has been fairly consistent in his categorization, which moved over time from “current” to “behind us.” But we’re still afraid that “everyone he talks to” is probably a narrow group of industry optimists. We see inventory continuing to be a problem, particularly given the slowing consumer’s likely impact on the mobile telephone market.
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