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National Semiconductor (NYSE: NSM) reported first-quarter earnings on Thursday after the bell. Net sales came in at $314 million, and net income was 13 cents per diluted share. According to our earnings preview, that 13-cent profit beat analyst expectations by a whopping six pennies. I'll tell you, I always enjoy when a company can beat by a little more than the boring penny. The top line also went beyond projections. The call was for roughly $300 million in sales.
Although these numbers represented steep drops when compared to year-ago data, it should be noted that, on a sequential basis, National Semiconductor showed significant improvement. Gross margin went up sequentially on better product mix and a benefit from a plant closing in China.
I think National Semiconductor, which counts Texas Instruments (NYSE: TXN) as a rival, did okay in Q1. Demand seems to be going in the right direction. And management will hopefully continue to focus on keeping operating expenses down and margins up.
When I consider this tech sector, I can't help but feel at least a little bullish. There's been a run-up in many of these stocks, but the headlines are predicting that the bad times will eventually pass, so there should be more upside potential to a lot of these stories.
Shares of National Semiconductor experienced only a small amount of profit-taking in yesterday's after-hours session; to me, that's a positive sign. I can see this equity going higher from here. The one big risk? When the heck is the market going to correct?! I'd like to tune into the financial news one of these days and witness a broad sell-off so I can start a few positions. So, timing would probably be your challenge at this point. Other than that, I believe National Semiconductor could be a buy.
Disclosure: I don't own any company mentioned; positions can change without notice.
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