LONDON – Financial results for the second quarter at ST-Ericsson, the mobile phone chip joint venture between STMicroelectronics NV and Ericsson AB, were bleak with sales down, losses up and a flat outlook for the third quarter. The company is also carrying costs from a renewed restructuring plan announced in June.
In the second quarter ST-Ericsson (Geneva, Switzerland) made a net loss of $221 million on sales revenue of $385 million and the company now owes its parent companies $445 million, almost double the amount owed in 1Q11. And with the company talking of a flat third quarter and slow ramps for new products at some customers, a turnaround is not imminent.
Sales in Q2 were $385 million down 13.3 percent on $444 million in the previous quarter and down 29.2 percent on 2Q10 sales of $544 million. As a result the net loss was $221 million up from $178 million in 1Q11 and up from $139 million in 2Q10.
"The lower second quarter revenue was substantially in line with our expectations," said Gilles Delfassy, president and CEO of ST-Ericsson, in a statement. "In the quarter we saw legacy product sales decline again sequentially contributing to a wider operating loss; however, we saw revenue from new products grow over the prior quarter, reaching about 45 percent of total sales."
"Our high-speed Thor modem revenue grew more than 20 percent sequentially as new HSPA+ phones continued to ramp in the market. Also in the quarter we delivered first samples of our Thor M7400 LTE modem and conducted field trials on our NovaThor U8500 platform with several customers. We are very pleased with our increasing progress on the NovaThor U8500, although initial volumes will be somewhat lower due to reduced demand at certain customers."
Delfassy said he was encouraged by the traction ST-Ericsson has at "industry-leading" customers. "While the present financial situation is very tough, we are on track to complete the transition to our new product portfolio in order to realize our aim of profitable leadership in this market," he said.