LONDON – A combination of continued losses and renewed market softness for Europe's leading chip company STMicroelectronics NV has led the company to make a 25 percent cut in its capital expenditure budget for 2012. For the first half of 2012 ST revenue was $4,165 million, down $936 million on the $5,101 million ST took in during the first half of 2011.
The company's results continue to be impaired by the consolidation on its books of the loss-making wireless chip joint venture ST-Ericsson (see ST-Ericsson grows revenue, losses).
ST made a net loss of $235 million on revenues of $2,148 million in the second quarter of 2012. The net loss attributable to the parent company, excepting ST-Ericsson figures, was $75 million in the second quarter. Sales revenue was up sequentially by 6.5 percent but down 16.3 percent from 2Q11. The net loss was trimmed from the first quarter but compared with a profitable 2Q11 when ST made a net profit of $311 million.
"Our second quarter financial results improved on a sequential basis despite a macro-driven change in customer sentiment in June," said CEO Carlo Bozotti, in a statement. "A critical component of our capability to improve our financial results is ST-Ericsson. During the quarter, the joint-venture took its first steps in executing their new strategic plan and showed initial progress on all profit and loss metrics. In parallel, we are committed to ensure that the VLSI block, our digital businesses plus ST-Ericsson, becomes self-sustainable and this is one of our top priorities."
Bozotti mentioned MEMS inertial sensors and driver ICs for AMOLED displays as successes from the second quarter.
The companies Analog, MEMS and microcontroller division business unit and its automotive business unit were the most successful in the second quarter, increasing sales and maintaining operating income. ST's digital and wireless business were able to reduce operating losses.
"Our joint venture ST-Ericsson is still in a challenging situation. The company continues to focus on securing the successful execution and delivery of its NovaThor ModAps platforms and Thor modems to customers while executing on company transformation aiming at lowering its break-even point," the company said in a statement.
"As we saw during the end of the second quarter, the global economic environment has weakened. As a result, bookings in June softened and remain somewhat volatile," said Bozotti, in the same statement. "Nonetheless, we continue to expect sequential revenue growth and gross margin improvement with respect to the third quarter, thanks to our new product momentum, in particular in MEMS, microcontrollers and Power MOSFET and IGBT." He added that as part of careful management of assets the company is reducing by approximately 25 percent the 2012 budget for capital expenditure to be in the range $500 million to $600 million.
thank you @docdivakar, yes, the market is crowded but has large projected growth rate so it is worthile to try to increase your market share...TI has also impressive MEMs capabilities, why didn't that work our for them in this sector? Kris
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