LONDON Wireless chip joint venture ST-Ericsson (Geneva, Switzerland) reduced its operating loss in the fourth quarter but nonetheless reported a big net loss in a difficult first year in operation. The outlook for the first quarter of 2010 was expected to reflect a usual seasonal decline.
In the fourth quarter ST-Ericsson made a net loss of $125 million on sales of $740 million. Both figures were slightly up from the net loss of $112 million made on sales of $728 million made in the third quarter. For the whole year the company made a net loss of $539 million on sales of $2,524 million.
Net cash was $229 million at the end of fourth quarter 2009, a sequential increase of $13 million, including improved working capital and a one-time payment of $53 million from parent companies related to final merger transaction adjustments already planned since the inception of the company.
"In the fourth quarter, we gained further momentum in one of the fastest growing markets, China, where we are the clear leader in its standard TD-SCDMA, having delivered more than 6.5 million chipsets by the end of December 2009. In addition, we have taken further actions to improve our financial performance and increase our competitiveness," said Gilles Delfassy, president and CEO of ST-Ericsson, in a statement.
"2009 has been a challenging year for our industry. For ST-Ericsson, the challenge was especially great. We had to strive to maintain our positioning, while also setting the foundations for sustainable and profitable growth. We will achieve this by rapidly integrating the businesses we have merged and by transitioning to the new portfolio strategy we devised for our next generation offering," he said.
"We are well positioned to remain a leading player, thanks to the combination of our advanced modem expertise and multimedia processing capabilities," Delfassy concuded.
In December 2009 ST-Ericsson announced a cost-cutting plan that is targeting additional annualized savings of $115 million. As part of this effort the company is looking to cut up to 600 employees worldwide. The targeted time of completion of this plan is end of 2010.
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