National Semiconductor Corp., a maker of analog and power management chips, posted a 40 percent rise in quarterly earnings on Thursday, but its outlook for the current quarter disappointed Wall Street.

Though the reported earnings beat expectations, the stock fell 3.6 percent to $23.50 in extended trade as the company's revenue forecast for the fiscal second quarter was short of analysts' average forecast.

Net income for the first quarter ended August 27 rose to $120.1 million, or 35 cents per share, from $85.6 million, or 24 cents per share, a year earlier amid strong demand for its most-profitable products. Net sales rose to $541.4 million from $493.8 million.

Analysts, on average, expected the company to earn 32 cents per share in the first quarter on revenue of $538 million, according Reuters Estimates.

The company also declared a cash dividend of 3 cents per share payable on October 10 to investors of record on September 18.

The Santa Clara, California-based company makes a variety of chips for tasks such as regulating battery use in portable devices, processing digital audio and regulating temperatures. It competes with Analog Devices Inc. (NYSE:ADI - news), Europe's STMicroelectronics (STM.PA) and Texas Instruments Inc.

(NYSE:TXN - news).

National Semiconductor reported a gross profit margin of 61.7 percent, up from 56.2 percent a year earlier, as the company sold more higher-profit analog products.

The company said it expects second-quarter revenue to fall about 2 percent to 5 percent from the first quarter, mainly because of lower revenue from foundries, or chip fabrication operations.

The decline would result in second quarter revenue of $514 million to $531 million, missing analysts' average estimate of $553.3 million. Analysts expect second-quarter profit excluding items to be 34 cents.

National Semiconductor also said it sees lower gross profit margins in the second quarter compared with the first quarter, although the margin should remain above 60 percent. The company has said it is targeting margins of 65 percent.

Its shares had closed on Thursday 0.8 percent higher at $24.39 on the New York Stock Exchange.