Losses at ST-Ericsson hit ST's bottom line
7/22/2010 7:43 PM EDT
SAN JOSE, Calif. - Despite losses at ST-Ericsson, STMicroelectronics Inc.'s revenues for the second quarter of 2010 totaled $2.531 billion, up 8.9 percent sequentially and up 27 percent year-over-year.
The figures include sales recorded by ST-Ericsson, a joint wireless chip venture between STMicroelectronics and Ericsson. In total, ST reported net income of $356 million in the second quarter of 2010, or $0.39 per diluted share, compared to a net income of $57 million in the prior quarter and a net loss of $318 million in the year-ago period.
ST reported a net gain of $264 million on equity investments and divestiture mainly due to the sale of the company's 48.6 percent stake in NOR flash vendor Numonyx to Micron Technology Inc. Numonyx was a joint venture between Intel and ST.
ST's capital expenditures were $134 million during the second quarter of 2010, compared to $74 million in the year-ago period. For the 2010 first half, capital expenditures totaled $313 million, somewhat below the company's targeted level, due to extended lead times for capital equipment.
Related to the company's cost-realignment initiatives, ST posted second quarter restructuring and impairment charges of $12 million. ST posted restructuring and impairment charges of $33 million and $86 million in the prior quarter and year-ago period, respectively.
On a year-over-year basis, all market segments, except telecom, posted growth. ''Obviously, we are not satisfied with the results in wireless. However, we are encouraged by ST-Ericsson's progress in achieving key design-wins as well as restructuring, towards a progressive recovery,'' said ST President and CEO Carlo Bozotti, in a statement.
For the quarter, ST-Ericsson said sales decreased by 10 percent sequentially to $544 million. This compares to sales of $606 million in the previous period and $666 in the like period a year ago. It posted a loss of $139 million in the quarter, compared to a loss of $154 million in the previous period and a loss of $213 million a year ago.
In a statement, President and CEO, Gilles Delfassy, said: “Our performance in the quarter was the result of both lower sales and our continued tight control of costs. Our sales in the quarter continued to reflect the impact of our ongoing portfolio transition, combined with weaker-than-expected performance in Asia and some supply limitations.''
Its restructuring plans, respectively, of $230 million, announced on April 29, 2009, and of $115 million, announced on Dec. 3, 2009, are on track. In the current quarter, the company expects net sales to be slightly up sequentially.
For ST, the outlook is brighter. "We expect sequential revenue growth of between 2 percent and 7 percent, which equates to solid growth of 13 percent to 19 percent when compared to the year-over-year period,'' Bozotti said.