Selecting a benchmark company:
The National Semiconductor Corporation (NSM) develops and manufactures semiconductors for electronic systems. The firm's products are used in a variety of applications, including LED lighting, high speed communication, renewable energy, and security and surveillance. The company's chief financial officer (CFO) has a report prepared annually that compares the firm's performance to several key competitors. The CFO has identified Analog Devices (ADI) and Texas Instruments (TXN) as key competitor. Selected information for all three companies is given below for the twelve month period ended June 2009. Based on this information, which of the two companies appears to be the beast match for a performance benchmark and why?
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National Semiconductor (NSM)
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Analog Devices Inc. (ADI)
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Texas Instruments (TXN)
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Revenue (billions)
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$1.64
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$2.27
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$11.32
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Gross margin
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64.41%
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58.83%
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46.80%
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Operating margin
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25.35%
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20.09%
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17.67%
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Net income
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220.20M
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349.78M
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1.28B
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Earnings per share
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0.924
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1.225
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0.978
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Price to earnings ratio
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15.56
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20.48
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21.31
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