National Semiconductor Falls on Q2 Warning

National Semiconductor Corp. (NYSE: NSM) was down US$1.05 at $26.26 in morning trading Friday after the chipmaker said sales for the third quarter ending February 25th may end up below second-quarter levels.

Reports said that National Semiconductor officials blamed slower sales of computers and wireless phones for the drop in demand. Phone manufacturers Nokia (NYSE: NOK) and Ericsson (Nasdaq: ERICY) have in recent days warned of weak results.

Ericsson also announced plans to stop making handsets entirely, outsourcing production instead.

National Semiconductor, in its second warning on profits for the quarter, said sales will likely total $475 million to $480 million for the quarter, resulting in earnings per share of 20 to 22 cents.

Analysts had expected the company to earn 31 cents per share on sales of $558 million, reports said.

“Shipments in the current quarter are impacted by slower ‘turns orders’ caused by demand uncertainties and inventory corrections in the distribution channel and personal computer and wireless handset markets,” the company said.

“Turns orders” are orders requested for delivery in the same quarter.

National Semiconductor president and chief executive officer Brian Halla said the company “had a respectable quarter,” though he noted “inventory corrections” by some mobile phone customers and slower PC demand.

In December, National Semiconductor reported earnings of $106.7 million, or56 cents per share, for the second quarter ended November 26th, up from$70.4 million, or 37 cents, in the same period a year earlier. Revenue roseto $595 million from $513.9 million.

At the time, the company said that “the impact of continued inventory adjustments in the distribution channel, a gradual stabilization of sales in the mobile phone market, and seasonal weakness in the PC and peripherals market” could result in a sales decline for the February quarter of as much as 10 percent below second-quarter levels.

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