Electronic
Sales will probably fall to between $1.73 billion and $1.93 billion, from $2.38 billion in the same quarter last year, the Geneva-based company said yesterday in a statement. The company also said its ST-Ericsson venture plans to cut 1,200 jobs.
“The global economic environment deteriorated further during the first quarter,” Chief Executive Officer Carlo Bozotti said in the statement. While the company is seeing some signs of recovery, its still too early to say whether the improvement is sustainable, he said.
Sales of the companys chips, used in products ranging from handsets to washing machines and computers, have slumped as consumers and businesses curbed spending. Global chip sales dropped 30 percent in February from a year earlier, the fifth straight monthly decline, the Semiconductor Industry Association said this month. In January, Bozotti forecast the market will drop more than 20 percent in 2009.
“The first quarter should be the bottom for the semiconductor industry,” Jerome Ramel, an analyst at Exane BNP Paribas, wrote in April 27 note.
STMicroelectronics reported a wider first-quarter loss yesterday as demand deteriorated. The net loss expanded to $541 million, or 62 cents a share, from $84 million, or 9 cents, a year earlier. Sales fell 33 percent to $1.66 billion.
Gross Margin
The companys gross margin, the percentage of revenue left after subtracting manufacturing costs, narrowed to 26.3 percent in the first quarter from 36.3 percent a year earlier.
On Jan. 27, STMicroelectronics predicted sales of $1.5 billion to $1.85 billion in the first quarter. The company also said it aimed to save more than $700 million this year as it cuts 4,500 jobs.
STMicroelectronics had a net loss of $366 million in the fourth quarter, when it posted a non-cash expense of $204 million, mainly linked to a writedown of its Numonyx BV stake. Numonyx is a flash-memory venture created by STMicroelectronics and Intel Corp.
In the first quarter, the company had an expense of $232 million, linked to its investment in Numonyx.
Sales to the automotive market fell 47 percent, consumer sales dropped 34 percent, telecommunications sales retreated 9 percent, and industrial sales fell 41 percent, the company said.
STMicroelectronics said its sales outlook for the first quarter was an internal planning target, adding that demand is extremely difficult to predict. Gross margin will narrow to a point in the “mid-20s,” a level that is “extraordinary low,” the company said.
The slowdown at STMicroelectronics mirrors results at other semiconductor and phone companies. Intel, the worlds largest chipmaker, said this month that first-quarter profit fell 55 percent because of slowing computer demand. CEO Paul Otellini said his company still faces a “fragile global economic environment.”
Nokia Oyj, the worlds biggest mobile-phone maker and STMicroelectronics largest customer, said this month it will meet profit margin forecasts in 2009 and repeated its prediction of a 10 percent slide in industry unit sales this year.