STMicroelectronics suffered a hefty loss in the second quarter on charges related to the contribution of its flash memory business to a joint venture and revenue fell from the year-ago quarter but improved sequentially on strong contributions from the wireless and digital consumer markets.
The Geneva, Switzerland-based company reported a net loss of $758 million, or 84 cents per share, in the three months ended June 30, compared with net income of $168 million, or 18 cents per share, in the second quarter of 2006.
Revenue for the just ended quarter rose 6 percent from the first quarter but fell 3 percent from the second quarter of 2006 to $2.42 billion, matching the average estimate of analysts polled by Thomson Financials. ST posted revenue of $2.49 billion in the year-ago quarter.
ST slipped into the red in the latest quarter primarily because of a $906 million charge related to impairment and restructuring costs. The charges pushed the company into an operating loss of $772 million for the quarter, compared with operating income of $169 million in the second quarter of 2006.
"From the operational point of view, ST's sequential revenue results, led by recovery in wireless and digital consumer, concretely demonstrate our ability to increase sales and, we believe, gain market share," said Carlo Bozotti, ST's president and CEO, in a statement.
A breakdown of the one-time expenses taken by ST in the latest quarter shows the company posted $857 million in charges related to the contribution of its flash business to Numonyx, a new company jointly formed in May with Intel Corp. and private equity firm Francisco Partners.
The company also reported a charge of $40 million for its ongoing reorganization in addition to $9 million for a previously announced restructuring.
ST said it expects an increase of between 2 percent and 7 percent in third quarter revenue. CEO Bozotti added that the company's gross margin should "expand to about 35.5 percent plus or minus one percentage point," from just under 35 percent in the second quarter.