A lone semiconductor manufacturer breaks the silence on Wall Street. Broad-line chip designer National Semiconductor (NYSE:NSM) is set to report earnings after the closing bell on Thursday. Let's have a peek inside the factory.

What analysts say:

  • Buy, sell, or waffle? Twenty-four analysts follow this company, making it the subject of very close scrutiny. Five of them have issued a buy rating, two a sell, and the other 17 are simply holding today. In our Motley Fool CAPS community, National Semi is a five-star stock with 13 all-star players handing out outperform ratings, unopposed.
  • Revenues. The average forecast calls for net sales of $501.5 million, a 7.4% sequential decline that fits right in the middle of management's lowered guidance, and 7.8% below the year-ago period.
  • Earnings. Analysts are holding out for $0.27 of profits per share, down from $0.32 last year.

What management says:
In early November, management lowered its revenue guidance from a sequential 2%-5% decline to a 7%-8% slide. The previous quarter saw sales of $541.4 million. The pessimistic outlook was a result of slower-than-expected orders from wireless handset makers like Nokia (NYSE:NOK) and Motorola (NYSE:MOT).

On the other hand, the annual dividend got a 33% boost back in October, so National Semi's management clearly believes that there are better days ahead.

What management does:
That order shortfall will bump gross margins back down below 60% again, but the overall trends here are very positive.

Margins %

5/05

8/05

11/05

2/06

5/06

8/06

Gross

53.4

53.6

55.3

57.3

59.0

60.4

Op.

22.4

22.2

25.5

28.5

31.5

33.5

Net

21.7

20.6

20.9

22.4

20.8

21.9

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
National Semi reports in a relatively quiet period before all the major semiconductor manufacturers break out their numbers. That puts the company in the spotlight as investors look to National to get clues on how the quarter is shaping up for the industry at large.

The lowered guidance is a first hint that the figures might not look stellar this time around. But keep in mind that National is in the habit of underpromising and overdelivering. It has never reported earnings below analyst estimates, and the last time targets were only met rather than blown away was in March, 2003. Let's see how the sandbag's stacked up this time.

Competitors:

  • Texas Instruments (NYSE:TXN)
  • International Rectifier (NYSE:IRF)
  • Maxim Integrated Products (NASDAQ:MXIM)
  • Linear Technology (NASDAQ:LLTC)

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolishdisclosureis always timely.