Trading Earnings: The Chips are Down

National Semiconductor (NSM) is set to report earnings After the market closes Monday, December 8. National Semiconductor Corporation is a semiconductor company that engages in the design, development, manufacture, and marketing of semiconductor products, primarily analog and mixed-signal integrated circuits.

NSM is expected to earn a profit of 21 cents for its 2nd quarter. We expect the tech company to announce earnings that will miss investors’ and analysts’ expectations as we believe the environment for chipmakers is tougher than most expect.

According to Semiconductor Industry Association, “The slowdown in worldwide semiconductor sales that became evident in September continued in October.” SIA President George Scalise said “the worldwide financial turmoil is expected to continue to impact demand for semiconductors as we enter 2009. For 2009 PC unit shipments are forecast to decline by 5% and cell phone unit shipments are projected to be down by 9%.” Cell phones and PCs account for roughly 60% of the chip market.

Recently AMD reported earnings that were bad, even by AMD’s standards. They lowered their revenue expectations for the next quarter by 25%. AMD said its dampened outlook is “due to weaker-than-expected demand across all geographies.” STMicroelectronics warned that its revenues and earnings will be lower going forward. The company said the guidance “reflects the well-known weaknesses in the industry, across most geographies and market segments, and, in particular, in wireless, automotive and computer peripherals.”

National Semi has a history of moving up or down more than 10% following earnings. With a weaker than expected report, NSM could trade at a series of new 52-week-lows.

Suggested Stop: $12.09