National Semi Shares Bounce Despite Forecasting a 30% Drop in Sales (NSM)

Tom Reese/Paul Rubillo,

National Semiconductor (NSM) announced late Monday that its third-quarter sales will be about 30 percent below second-quarter levels.

Management is citing poor demand in the market for personal mobile devices. The company reported its 2nd quarter bookings fell 33 percent, compared with first-quarter levels. The company experienced a significant drop in new order rates from customers in the wireless handset market as well as distributors serving a cross-section of industries.

The Bottom Line

We have avoided shares of NSM since our early June coverage began, when the stock traded at $23.74. The company has a 3.11% dividend yield, based on last night's closing stock price of $10.29. The $9-10 price area is critical from a technical perspective, and a break of those levels can easily take the shares to the $4.50-5.00 level. The shares are up today as bottom-fishers move in. We would still avoid shares at this point.

National Semiconductor (NSM) is not recommended at this time, holding a Rating of 2.8 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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