Losses widen at ST-Ericsson

LONDON — Wireless chip maker ST-Ericsson said it made a net loss of $177 million on net sales of $577 million in the fourth quarter of 2010 and expects revenue to decline in the first quarter of 2011.

The net loss widened from the previous quarter's loss of $121 million on sales that were up by 2.1 percent from $565 million. On an annual basis sales were down by 22 percent from the fourth quarter a year before when the company made a net loss of $125 million on sales of $740 million.

As a result the company's net financial position went from a positive position of $39 million at the end of the third quarter to negative $82 million at the end of the fourth quarter.

"Sales in the fourth quarter came in line with our expectations, even slightly better," said Gilles Delfassy ST-Ericsson president and CEO, in a statement.

The outlook for 1Q11 is that the company expects sales to decline sequentially, reflecting both the accelerating decline of legacy products and the effect of first quarter seasonality.

For the full year 2010 ST-Ericsson made a net loss of $591 million on sales of $2,293 million. The loss was wider and the sales lower than in 2009 when the company made a net loss of $539 million on sales of $2,524 million.

"Operating loss increased sequentially mainly due to higher operating expenses reflecting anticipated seasonality and currency effects, as well as price erosion due to our ongoing legacy product transition. However, we also saw $13 million of savings as we completed our restructuring as planned and on time," said Delfassy, "Overall, 2010 was a pivotal year for ST-Ericsson. Today, we are well on our way to completing the transformation of our company like we set out to do - focusing on expanding our product portfolio to the smartphone and tablet markets, where we aim to be a leader with best-in-class modems and application solutions. In fact, we are seeing increasing traction in these markets with products such as our U8500 smartphone platform, which we plan to ramp in the second half of the year with several Tier 1 customers."

"In 2011, our focus is to deliver our exciting new products to customers and improve financial performance as we complete our transition. While our near-term outlook is challenging, we are making good progress and are confident that our work will put us on the path to market leadership and sustainable profitable growth," he concluded.


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