National Semiconductor posted a lower quarterly profit on Thursday, but the maker of power management and other chips said inventory concerns appeared to be behind it, and its shares rose.
National Semi said it expected revenue for its current, fourth fiscal quarter to rise 3% to 6% from the prior quarter.
"Bookings from our customers and distributors improved through the latter part of our third quarter," chief executive Brian Halla said. "This suggests that the inventory correction may well be behind us."
National Semiconductor, whose chips regulate battery life, process digital and audio signals and go into display screens, said net profit for its third quarter ended Feb. 25 was $71.5 million, or 22 cents per share.
That was down from $130 million, or 37 cents a share, a year earlier but ahead of the $65 million, or 20 cents a share, that was the average forecast from Wall Street analysts on Thomson Financial.
Revenue was $431 million, down 21% from a year earlier and just shy of the $432.9 million expected by analysts.
The company's forecast would put fourth-quarter revenue in the range of about $444 million to $457 million, compared with an average forecast of $448.5 million.
Last month, National Semi said quarterly revenue would see a bigger-than-expected sequential fall because of sluggish shipments to distributors.
National Semi's rivals include Texas Instruments, Analog Devices and Maxim Integrated Products.
Shares in National Semi rose as much as 2.8% to $26.00 in extended trading after the results were released.
Although the stock is 9% below its year-ago level, it has risen more than 13% over the last month amid optimism that the chip industry has worked through excessive inventories.