National Semiconductor Revises Revenue Outlook for First Quarter of Fiscal 2007

August 22, 2006 -- National Semiconductor Corporation (NYSE:NSM) today announced that it is lowering its revenue outlook for the first quarter of fiscal 2007, ending August 27, 2006.  The company now anticipates that revenue for the first quarter of fiscal 2007 will be down approximately 6 percent sequentially from the $572.6 million in revenues that were achieved in the fourth quarter of fiscal 2006.  The company had previously guided on June 8, 2006 that first quarter of fiscal 2007 revenues were expected to be down 2 to 3 percent sequentially.  

The 6 percentage points of anticipated sequential revenue decline are comprised of:

• Approximately 2 percentage points attributable to lower-than-expected shipments into wireless handset customers   
• Approximately 2 percentage points attributable to lower shipment activity due to summer seasonality    
• Approximately 2 percentage points attributable to reduced foundry revenue from the previously disposed of Cordless and PC Super I/O businesses in line with the original guidance.  These lower-margin foundry revenues are associated with manufacturing support being provided to the new owners of these businesses during a transition period as they transfer manufacturing to other sources.

National is not changing its guidance on gross margin percentage. 

The company had originally guided that its first quarter fiscal 2007 gross margin percentage, which included an estimated $2 million of stock compensation expense, would be about the same as the 61.4 percent achieved in the fourth quarter of fiscal 2006. 

National’s first quarter financial announcement and conference call are scheduled for September 7, 2006, at which time the company will discuss results in more detail as well as the outlook for the second quarter of fiscal 2007.

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