National Turns Up the Heat: Fool by Numbers
On Sept. 6, broad-line semiconductor maker National Semiconductor (NYSE: NSM) released first-quarter 2008 earnings for the period ending Aug. 26, 2007.
- Sales are down significantly from last year because of a challenging year for cell phone manufacturers. Shareholders of other component suppliers such as Texas Instruments (NYSE: TXN) and Analog Devices (NYSE: ADI) would be quick to concur on that point.
- On the other hand, revenue did tick up 3.4% from last quarter despite the seasonally slow summer business. Over the past 10 years, National's first-quarter sales have been lower than the preceding quarter's more often than not. (Source: Capital IQ, looking at income data over time.)
- It's the second-fattest gross margin in the company's recorded history -- after Q4 2007.
- National took on $1.5 billion of new debt to finance some of its share buyback program. The company has some recent and illustrious company in this practice.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q1 2008
|
Q1 2007
|
Change
|
|
Sales
|
$472
|
$541
|
(12.9%)
|
|
Net Profit
|
$86
|
$120
|
(28.7%)
|
|
EPS
|
$0.30
|
$0.35
|
(14.3%)
|
|
Diluted Shares
|
283.9
|
343.7
|
(17.4%)
|
Get back to basics with the income statement.
Margin Checkup
|
Q1 2008
|
Q1 2007
|
Change*
|
|
Gross Margin
|
63%
|
61.8%
|
1.2
|
|
Operating Margin
|
28%
|
30.6%
|
(2.5)
|
|
Net Margin
|
18.2%
|
22.2%
|
(4.0)
|
*Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
Q1 2008
|
Q1 2007
|
Change
|
|
Cash + ST Invest.
|
$962
|
$840
|
14.5%
|
|
Accounts Rec.
|
$176
|
$196
|
(10.1%)
|
|
Inventory
|
$166
|
$196
|
(15.4%)
|
|
Liabilities
|
Q1 2008
|
Q1 2007
|
Change
|
|
Accounts Payable
|
$58
|
$82
|
(29.2%)
|
|
Long-Term Debt
|
$1,520
|
$0.2
|
7,599%
|
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q1 2008
|
Q1 2007
|
Change
|
|
Cash From Ops.
|
$126
|
$133
|
(5.2%)
|
|
Capital Expenditures
|
$24
|
$41
|
(41.4%)
|
|
Free Cash Flow
|
$102
|
$92
|
10.8%
|
|
Owner Earnings
|
$91
|
$119
|
(23.5%)
|
Free cash flow is a Fool's best friend.
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