National Instruments Corporation Q2 2009 Earnings Call Transcript

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2009-07-24 07:26:21.0

Tags: National Instruments Corp., J.P. Morgan Chase & Co., Call Transcript, Order, Earnings, Sales Strategy, Sales Force Management, Sales, Seeking Alpha

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Your first question comes from [Anthony Lascrusi] - JPMorgan.

Anthony Lascrusi - JPMorgan

Can you talk a little bit more about your ability to provide guidance for the September quarter? What has changed and how has your visibility improved?

Alexander M. Davern

In a number of ways, Anthony. Certainly, you know, we've obviously went through a period of fairly rapid decline, not only in the global economy, the global PMI starting last fall that really came to a trough in December at some really record low numbers, and then obviously we've seen a rate of decline in the broader economy slow down as we're heading through Q1 into Q2. That gives us some confidence that the likelihood is pretty strong that industrial production globally will probably turn positive some time in the next few months.

Now that, combined with the behavior of our customers, we're seeing a change or we saw a change in the behavior pattern, especially in the last three or four weeks of June, on a large order front to what we've seen both in December and in March. In December and March we saw very, very reluctant customers relative to larger orders and we saw that free up noticeably at the end of the June quarter.

That allowed us, obviously, to add about $6 million in backlog during the June quarter and the combination of those factors, with the traffic pattern we're seeing in our more transactional orders and the stability we have seen there, has given us confidence that we're in a position now to give guidance here for the September quarter.

Anthony Lascrusi - JPMorgan

Okay, by follow up would be the large orders that you saw in the June quarter, do you believe those to be sustainable and what vertical, if you could be specific, are you receiving those orders from?

John M. Graff

In terms of sustainability, I guess we have to see. It's still subject to capital purchasing patterns in the end markets. But after not seeing it in Q4 and in Q1, we were pleased to see some reemergence of that pattern.

In terms of the verticals, I mean, again, it's a variety. The diversity of our business has been one of our strengths. Obviously, the large orders are smaller in quantity, but we saw successes in large orders for RF and communications tests. I know we saw some large orders for industrial-embedded machine-type applications. So I think it's nice execution by our field sales force to identify, manage and close these opportunities.

 

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