SAN FRANCISCO—European chip vendor ST Microelectronics NV Tuesday (April 26) reported first quarter sales that came in slightly below expectations, with the company saying that sales at its ST-Ericsson cell phone chip joint venture decreased more than expected.
ST (Geneva) reported first quarter revenue of $2.54 billion, down 11 percent compared to the previous quarter and up 9 percent compared to the first quarter of 2010. ST reported a net income for the quarter of $170 million, down 22 percent from the previous quarter and up 188 percent compared to the first quarter of 2010.
ST's sales for the quarter came up slightly short of consensus analysts' expectations, which called for the company to report revenue of $2.55 billion, according to Yahoo Finance. On a pro forma basis, excluding charges, ST reported a net income for the first quarter of $175 million, or 20 cents per share, consistent with consensus analysts' expectations.
ST President and CEO Carlo Bozotti called the first quarter a strong start to 2011 for ST. "Year-over-year, our revenues were particularly strong in automotive applications and in our analog, MEMS, microcontrollers and power discrete offerings," Bozotti said. "Our gross margin improved 140 basis points and our operating margin before restructuring attributable to ST reached 9.9 percent."
Bozotti said ST's analog, MEMS and microcontrollers revenues increased 38 percent year-over-year with broad contribution from new product families. Power discrete products revenues increased 18 percent and the company's automotive, consumer, computer and communication infrastructure segment also increased 18 percent, mainly due to strong demand in automotive, Bozotti said.
Wireless revenues decreased 34 percent as sales of ST-Ericsson's legacy products declined more than anticipated, Bozotti said.
"It is clear that our new products, well positioned on our targeted applications, are gaining traction and this makes us confident for 2011 as a whole, despite the short-term impact to the semiconductor industry's supply chain due to the dramatic events in Japan," Bozotti said. "Our customer base is rapidly expanding as we are helping our customers to grow and take leadership positions in their businesses."
ST derived 76 percent of its first quarter revenue from direct sales to OEMs, down from 81 percent in the first quarter of 2010, the company said.
ST took first quarter impairment and restructuring charges of $24 million, down from $33 million and $32 million in the year-ago and prior quarter, respectively. At the end of the first quarter, ST closed its fab in Phoenix, the company said, substantially completing the ST's previously announced restructuring of manufacturing operations.
ST said it expects second quarter revenue to be between $2.49 billion and $2.67 billion, down 2 percent to up 5 percent sequentially, including an anticipated net sales decline at its ST-Ericsson joint venture with Ericsson. Consensus analysts' expectations pegged ST's second quarter revenue forecast at $2.66 billion, according to Yahoo Finance.
Bozotti said that the impact of supply chain disruptions in the wake of the March 11 earthquake in Japan has been manageable from ST's perspective, but that the company remains vigilant and is prepared to adjust to and support any shifts in demand or changes to the semiconductor supply chain.