On December 4, the company lowered its revenue guidance by 2% in response to the dramatic fall in the global PMI index in October and November and also in anticipation of a pause in business toward the end of December as a result of customer shutdowns that had been announced up to that point. NI modeled the impact of the customer shutdowns and overall pause in business on its experience in 2001.

The company’s orders received in December 2008 were within the range; however, the impact of the expected year-end pause in purchasing expanded to include the rescheduling of around $5 million in orders that had been booked as of November 30th and that the company had anticipated shipping in December. As a result, the company’s December revenue fell short of the expectations expressed on December 4, 2008.

National Instruments currently expects that GAAP fully diluted earnings per share (EPS) will be in the range of $0.23 to $0.24 per share for Q4 with non-GAAP fully diluted EPS to be in the range of $0.29 to $0.30 per share. When comparing our guidance with our GAAP and non-GAAP fully diluted EPS in Q4 2007, please note that in Q4 last year NI recognized an $18.3 million tax credit which had the impact of increasing our GAAP and Non-GAAP EPS by $0.23 in Q4 2007. Excluding this credit, GAAP and non-GAAP EPS for Q4 2007 would have been $0.33 and $0.39, respectively.

‘While we believe the industry experienced a significant contraction in Q4, the diversity of our business and the solid execution of our sales force allowed us to gain market share,’ said James Truchard, National Instruments president, co- founder and CEO. ‘Our virtual instrumentation and graphical system design products continued to show slight growth and the significant new products we introduced at NIWeek 2008, including 6.6 GHz RF modular instruments, wireless data acquisition, NI Single-Board RIO, and LabVIEW 8.6 had impressive sales in the quarter.’

National Instruments virtual instrumentation and graphical system design products, which represent more than 90% of the company’s product portfolio, had around 2% year-over-year revenue growth in Q4 2008. Sales of NI instrument control products, which represented around 7% of NI revenue in the quarter, were down around 30% year-over-year in Q4 2008.

For Q4 2008, the company now expects year-over-year growth in total GAAP and non-GAAP operating expenses to be between 5% and 6%, down from the 18% year-over-year growth the company saw in the first nine months of 2008.

The company’s revenue estimate anticipates single digit revenue declines in Asia and Europe and single digit revenue growth in the Americas in US dollar terms for Q4 2008 compared to fourth quarter of 2007.

With $276 million in cash and cash equivalents at the end of September the company’s balance sheet is very strong and during the fourth quarter, the company repurchased 1,989,000 shares of its common stock at an average price of $22.84 per share

2009 Outlook

‘Looking into 2009 we plan to sustain our strategic R&D investments and continue a moderated field sales expansion, while stringently managing expenses in all other areas of our business,’ said Alex Davern, NI CFO. ‘As a result the rate of growth in our operating expenses in 2009 will be significant lower than in 2008. We will monitor the situation carefully and will provide more detailed guidance in our scheduled call on January 29, 2009.’