Restructuring weighs on ST-Ericsson results

LONDON — Wireless chip maker ST-Ericsson made a net loss of $154 million on net sales of $606 million in the first quarter of 2010. The company said it expected a flat second quarter to follow. Net sales increased by 7.9 percent compared with the same period a year before but ST-Ericsson did not provide a net profit or loss figure for comparison.

ST-Ericsson was established as a 50:50 joint venture by STMicroelectronics NV and Swedish telecom equipment giant LM Ericsson Telephone Co. and started operations on Feb. 2, 2009. The company supplies chipsets to four of the top five handset makers.

The continued losses, larger than the $125 million net loss made in the fourth quarter of 2009, reflect the impact of restructuring and an portfolio transition, the company said.

"Sales in the quarter reflected the short-term impact of the ongoing portfolio transition, as well as some seasonality and the lower number of days in the fiscal period. Our restructuring plans are well on track," said Gilles Delfassy, president and chief executive officer, in a statement.

"We have already taken significant steps towards achieving our planned transformation and our new portfolio has been well received by our customers. Our recently launched low-cost, Android-ready platform, the U6715, is already shipping to Acer; we have announced a number of enhancements to our smartphone offering, the U8500, and in TD-SCDMA we confirmed our leading position, having delivered more than 10 million chipsets," he added.

The company said it expects sequential net sales approximately flat with respect to the first quarter 2010, due to the continued ongoing short-term impact of the portfolio transition. Given the expected top line and based on the progression of the restructuring plans, the company said it does not expect a change into profit to come until the second half of 2010.