Investors with an eye on chip makers -- and those hoping for signs that electronics providers are ramping up on hints of demand -- should make a note to watch National Semiconductor (NYSE:NSM) today as it reports its fiscal 2004 first-quarter earnings.
Kind of like launching fat-free potato chips for a weight-obsessed nation, National Semi has been streamlining its version of the chip biz to create a lean, mean business plan for Wall Street's fiscal health nuts. These initiatives include a restructuring, as well as the sale of its Information Appliance unit -- which consisted of its Geode microprocessor line -- to fellow chip concern Advanced Micro Devices (NYSE:AMD).
Both moves are in line with National Semi's plan to focus on its stronger, higher-margin analog products, which make up about 75% of its business. Its analog products are used to enable sight and sound in whiz-bang applications like cell phones, flat-panel displays, and notebook computers.
So far, efforts have been well received in the marketplace, as National Semi's stock price has marched upward in recent months, hitting a 52-week high of $30.11 on Tuesday. Indeed, National Semi has bested the Philadelphia Semiconductor Index over recent months, which, while promising, could beg the question as to whether the stock can keep the upward momentum, and for how long.
National Semi competes in a space with quite a roster of rivals, including Analog Devices (NYSE:ADI), Koninklijke (Royal) Philips Electronics (NYSE:PHG), Motorola (NYSE:MOT), NEC Corp. (NASDAQ:NIPNY), ST Microelectronics (NYSE:STM), and Texas Instruments (NYSE:TXN).
Of course, high stock prices and formidable competition may give potential investors pause, and for good reason. Do you dig in and let the chips fall where they may? Or do you stay far away from this stock? Cool heads probably won't rush to the party on this one. After all, over a lifetime of investing, you can afford to wait for better prices if this is a company on your watch list.
National Semi closed Wednesday's trading down $0.63 at $28.82. Its conference call takes place at 1:00 p.m. ET, where analysts are looking for earnings of $0.12 for the quarter.
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