NEW YORK (AP) — Shares of chip maker National Semiconductor Corp. dropped Friday despite its strong fiscal second-quarter results as investors worried about the company’s market-share losses.
National Semiconductor reported earnings on Thursday that beat analysts’ expectations, and its guidance for third-quarter sales were higher than analysts polled by Thomson Reuters had predicted.
The CEO said new-order rates improved throughout the quarter. The company’s gross margins got a boost thanks to cost cuts in manufacturing and more sales of expensive products.
Still, the stock fell 63 cents, or 4 percent, to $14.64 in afternoon trading Friday.
“While (National Semiconductor) appears to be more profitable, it has largely been driven by higher profit margins, which leaves us concerned given the lack of revenue growth relative to its peers,” said Morgan Keegan analyst Harsh Kumar, maintaining his “market perform” rating.
Broadpoint AmTech analyst Doug Freedman said that some of that market share loss was “deliberate,” as the company exited some less attractive businesses in order to preserve profit margins.
