National Semiconductor Posts 68% Increase in Earnings

National Semiconductor Corp. posted a 68% rise in fiscal third-quarter profit Thursday as the maker of power management chips saw strong sales despite seasonal weakness in cellphones.

At the same time, inventories among National’s distributors rose during the quarter, prompting investor concern about a potential glut down the road, and the chip maker’s shares fell 3%.

“Somehow, the picture that’s out there is that the distributors are hoarding product and putting in this massive supply of inventory and it’s all going to come tumbling down,” Chief Executive Brian Halla told Reuters. He said he disagreed with this view. “We think they’re under control, possibly a little low.”

Net income for the period ended Feb. 26 rose to $130.1 million, or 37 cents a share, from $77.4 million, or 21 cents, a year earlier. Earnings per share topped the average Wall Street forecast by 5 cents, according to Reuters Research. Revenue rose 22% to $547.7 million, also beating analysts’ average estimate of $535.8 million.

The company forecast that sales this quarter would rise 2% to 4% from the prior quarter, implying revenue of as much as $569.6 million. That would surpass analysts’ average forecast of $555.6 million.

National shares fell 85 cents to $27.18.