PARIS Geneva-based chip vendor STMicroelectronics NV has significantly downgraded its revenue growth outlook for the fourth quarter of 2008. No doubt it does not come as a complete surprise. It is part of the current climate.
ST's shares fell 4.9 percent in Paris after the group said it now expects revenues to be between $2.2 billion and $2.35 billion in the fourth quarter of 2008, according to MarketWatch.
For the third quarter of 2008, ST posted revenue of $2.7 billion, and the chipmaker now anticipates a sequential change in the range of about -12.8 percent to -18.4 percent.
Does this profit warning come as a shock? Not really. Is it an isolated case? Not at all. There is indeed a sense of déjà-vu in the semiconductor manufacturing arena as Intel Corp. and NXP Semiconductors have made similar announcements in the last few weeks.
Mid-November, Intel Corp. indeed cut its fourth-quarter business outlook, saying it now expects to report revenue of $8.7 billion to $9.3 billion. The company had previously guided for fourth quarter revenue of $10.1 billion to $10.9 billion.
The No. 1 semiconductor manufacturer said revenue is being affected by "significantly weaker-than-expected" demand in all geographies and market segments, while the PC supply chain is aggressively reducing component inventories.
Similarly, NXP Semiconductors notified last week it is forecasting a 15- to 25-percent sequential decline in sales for the fourth quarter of 2008, blaming the weakening macroeconomic conditions and a deteriorating sales environment. This compares to the previous guidance of an 8 to 14 percent sequential sales decline, given by the company on Oct. 21.
Some suspense remains for rival Infineon Technologies AG as it will report its fourth quarter earnings on Dec. 3, 2008.
Looking more closely at ST, it is little to say that Bozotti has expressed cautious optimism in his recent public statements.
At an analysts' conference on Oct. 29, Bozotti said ST is not immune to the major challenges facing the global economy and the semiconductor industry downturn. The company then expected fourth quarter net revenue to be sequentially flat to down 8 percent. A sizeable percentage that ST has unfortunately updated today.
Mid-November, in his opening speech at STMicroelectronics' tenth party during Electronica in Munich, Germany, Bozotti declared: "Maybe you have not noticed it yet but there is a crisis out there in the market across all industries. We are all confronted, and it affects consumers' ability to purchase goods. Can we be immune? No, we can't. Can we do so something? Yes, we can."
He continued: "The consequence of the crisis is that since November 2006 we have moved from solid expectations to bleaker expectations."
Bozotti also demonstrated a sense of cautiousness when he said ST would not be embarking on any acquisitions of a similar size to the ST-NXP Wireless venture that it is in the middle of creating.
"We will not make other acquisition of this size," Bozotti told the audience. "But, we will continue our policy of making selective acquisitions and divestures if needed."
In 2008, ST acquired the wireless unit of NXP BV and is in the process of creating a joint venture between EMP, the wireless platform business of Ericsson.