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April 11, 2008

National cannot gain significant market share with its current sales approach.

Analysis of: Earnings Preview: National Semiconductor | seekingalpha.com
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Analysis By:
Donald Rheault 
Founder, Compass Technologies, Inc
Implications: There are several sales team approaches by the companies in the analog IC business-some are more succesful than others.    You have to balance cost of sales with a successful sales effort. National has too few "feet on the street" to compete for new designs with Analog Devices, On, Intersil, TI, ST Micro and others.

Analysis: Unless a company has an overwhelming advantage on the metrics of a product it must depend on its sales team fighting and capturing a portion of the current designs. There are two prevalent sales models: direct sales or the manufacturers rep model. It is possible to hire many direct salespeople at a high cost or share effort with a rep that has other lines. A rep only gets paid if he/she books an order. A direct person gets paid whether succesful or not.
Currently a company employing a rep model has variable cost of sales and the advantage of more people covering an area. If a company chooses wisely the other lines shared by the rep can contribute to design awareness and can be synergistic.
In New England National has 2-3 salespeople, Analog has 10-13, Intersil 6-7 etc. National's sales team cannot possibly be at the place and time of design decisions with this approach.


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