STMicroelectronics
Reports 2009 First Quarter
Financial
Results
· Revenues of $1,660 million, in-line
with plans
· Gross margin of 26.3% negatively
impacted by fab underloading
· Inventory reduced by $184
million
· Net financial position(*) increased to approximately $250
million net cash
Geneva, April 29, 2009 -
STMicroelectronics (NYSE: STM) reported financial results for the 2009
first quarter ended March 28, 2009.
First
Quarter 2009 Summary Financial Highlights (a)
In
Million US$ and %
|
Q1
2009
|
Q4
2008
|
Q1
2008
|
Net
Revenues
|
1,660
|
2,276
|
2,478
|
Gross
Margin
|
26.3%
|
36.1%
|
36.3%
|
Net
Income (Loss) per share
|
(0.62)
|
(0.42)
|
(0.09)
|
Adjusted
Earnings per share excluding impairment, restructuring and
other-than-temporary-impairment charges and purchase accounting
adjustments(*)
|
(0.31)
|
(0.06)
|
0.13
|
(a)The
first quarter 2009 financial review includes ST-Ericsson for the months of
February and March 2009, ST-NXP Wireless in Q4 2008 and the month of January
2009, and FMG in Q1 2008, except where noted.
(*) Net
financial position and adjusted earnings per share are non-U.S. GAAP measures.
Please refer to Attachment A for additional information explaining why the
Company believes these measures are important and for a reconciliation to U.S.
GAAP.
President
and CEO Carlo Bozotti commented, “The market environment during the first
quarter was difficult, although our revenues and gross margin generally tracked
to the plans we had at the beginning of the quarter.
ST’s
position in the wireless core business has improved significantly as a result of
the completion of the wireless joint venture with Ericsson in early February.
This action is a key milestone in reshaping ST’s product portfolio and
ST-Ericsson is now moving aggressively towards sustainable
profitability.
Our
overall operational performance in the first quarter was focused on mitigating
the impact of market conditions on cash flow. We reduced our inventory levels by
$184 million and we will continue to focus on inventory reduction.
Finally,
ST has returned to a net cash position from a net debt position. Our actions to
improve our financial flexibility continue to support our business
strategy.”
Revenue and Gross Margin
Review
ST’s 2009
first quarter net revenues of $1,660 million included $1,615 million from ST and
$45 million from Ericsson Mobile Platforms (EMP), reflecting two months of
operations of ST-Ericsson. Net revenues decreased 33.0% year-over-year driven by
significant weakness across most geographies and market segments.
From Q1
2009, market segments have been adjusted to reflect direct sales by ST to
Original Equipment Manufacturers and separate sell-in billing to Distribution.
Sales recorded by ST-Ericsson and consolidated by ST are included in Telecom and
Distribution. The following table provides a breakdown of revenues by market
segment and channel:
Net
Revenues By Market Segment / Channel
(In
%)
|
Q1
2009
|
Q4
2008
|
Q1
2008
ex
FMG
|
|
|
|
|
Market
Segment / Channel:
|
|
|
|
Automotive
|
12%
|
12%
|
15%
|
Computer
|
11%
|
11%
|
12%
|
Consumer
|
14%
|
14%
|
14%
|
Industrial
& Other
|
8%
|
9%
|
8%
|
Telecom
(a)
|
43%
|
35%
|
32%
|
Total
OEM
|
88%
|
81%
|
81%
|
Distribution
|
12%
|
19%
|
19%
|
(a)
Telecom net revenues include revenues from the wireless ICs
and platforms business through ST-Ericsson, from standard products for the
wireless business and from products for the telecom infrastructure
business.
All
market segments posted year-over-year declines reflecting the global economic
slowdown. In comparison to the year-ago quarter, Automotive in the first quarter
of 2009 declined 47%, Computer by 42%, Industrial by 41%, Consumer by 34% and
Telecom by 9%. On a sequential basis, Industrial in the first quarter of 2009
decreased by 33%, Computer by 31%, Consumer by 29%, Automotive by 27% and
Telecom by 11%. First quarter 2009 Distribution decreased sequentially by 52%
and by 56% year-over-year and in both periods of comparison reflects weak
industry conditions and reduction in inventory.
Gross
margin in the first quarter of 2009 was 26.3%. Excluding the former Ericsson
Mobile Platforms business, gross margin in the first quarter of 2009 was in-line
with the Company’s internal plan of mid to high 20s as a percentage of sales
entering the quarter. As expected, unused capacity charges negatively impacted
gross margin by over 8 percentage points. In the fourth quarter of 2008, gross
margin was 36.1% as reported or, on an adjusted basis, 37.5% excluding inventory
step-up purchase accounting adjustments related to the former NXP Wireless
business(*). In
the first quarter 2008, gross margin was 36.3%. Lower manufacturing
efficiencies, volumes and price more than offset the improved contribution of
product mix both sequentially and in comparison to the year-ago
quarter.
(*) Adjusted
gross margin is a non-U.S. GAAP measure. For additional information please refer
to Attachment A.
Operating Results
Review
In the
2009 first quarter, combined SG&A and R&D expenses of $837 million
compared to $876 million in the prior quarter and $813 million in the year-ago
period. First quarter 2009 operating expenses included the impact of the
wireless transactions, including $23 million in recurring amortization charges.
In comparison to the year-ago quarter, excluding FMG, the wireless additions
were partially offset by favorable currency effects and cost reduction
efforts.
SG&A
expenses totaled $280 million in the first quarter of 2009, compared to $304
million in the prior quarter and $304 million in the year-ago period. R&D
expenses in the first quarter 2009 totaled
$557
million, compared to $572 million, in the prior quarter and $509 million,
including one-time, in-process R&D charges of $21 million, in the year-ago
period.
Significantly
benefiting from the signature of the framework agreement of the 2008-2012 French
R&D Program, Other Income and Expenses registered income of $63 million in
the first quarter of 2009.
The
Wireless Product Segment (WPS) has been adjusted to reflect the consolidation of
the ST-Ericsson joint venture. WPS is now Wireless and includes the portion of
sales and operating results of the ST-Ericsson joint venture as consolidated in
the Company’s revenue and operating results starting in the beginning of
February 2009 and the results of ST-NXP Wireless’ business in January as well as
other margin related to the wireless business.
Given the
unusually high amount of unused capacity charges, the charges are reflected in
the segment “Others” in the first quarter of 2009 and prior quarters have been
restated accordingly.
Operating
Segment
(In
Million US$ and %)
|
Q12009
Net
Revenues
|
Q1
2009
Operating
Income
(Loss)
|
Q4
2008
Net
Revenues
|
Q4
2008
Operating
Income
(Loss)
|
Q1
2008
Net
Revenues
|
Q1
2008
Operating
Income
(Loss)
ex
FMG
|
|
|
|
|
|
|
|
ACCI
|
627
|
(35)
|
899
|
18
|
1,045
|
25
|
IMS
|
499
|
12
|
791
|
101
|
772
|
95
|
Wireless (a)(b)
|
518
|
(107)
|
575
|
(77)
|
348
|
(10)
|
Others (c)(d)
|
16
|
(263)
|
11
|
(181)
|
14
|
(214)
|
(a) Net
revenues of “Wireless” in the first quarter of 2009 includes revenues from
ST-NXP Wireless’ business in January and the sales of the ST-Ericsson joint
venture starting in the beginning of February 2009.
(b)
Operating income (loss) of “Wireless” includes the operating results from ST-NXP
Wireless’ business in January, the operating results of the ST-Ericsson joint
venture starting in the beginning of February 2009 and other items affecting
operating results related to the wireless business.
(c) Net
revenues of “Others” include revenues from sales of Subsystems, assembly
services and other revenues.
(d)
Operating income (loss) of “Others” includes items such as unused capacity
charges, impairment, restructuring charges, and other related closure costs,
start-up costs, and other unallocated expenses such as: strategic or special
research and development programs, acquired in-process R&D and other
purchase accounting impacts, certain corporate-level operating expenses, patent
claims and litigations, and the other costs that are not allocated to product
groups, as well as operating earnings or losses of the Subsystems and Other
Products Group. The first quarter 2009 “Others” includes $139 million of unused
capacity charges and $56 million of impairment and restructuring
charges.
ACCI’s
(Automotive/Consumer/Computer/Telecom Infrastructure Product Groups) net
revenues declined 40% year-over-year to $627 million. On a sequential basis,
ACCI’s net revenues decreased 30.2%. ACCI’s operating results posted a loss of
$35 million, compared to income of $17 million in the year-ago period due to
lower sales volume and prices, offset in part by mix improvements.
IMS’
(Industrial and Multisegment Product Sector) net revenues decreased 35.5%
year-over-year to $499 million, reflecting a general decline in multisegment
market conditions. MEMS was a particular bright spot. First quarter IMS sales
comprised $322 million of ICs which decreased 32.8% year-over-year and $177
million of discrete products which decreased 39.7% year-over-year. On a
sequential basis, IMS’ net revenues decreased 37.0%. IMS operating profit was
$12 million, compared to $90 million in the year-ago quarter reflecting
decreases in both volumes and prices offset in part by mix
improvements.
Wireless
net revenues increased 49.1% year-over year to $518 million but decreased
sequentially by 9.9%. For the first quarter of 2009, Wireless net revenues
results reflected two months of operations of the ST-Ericsson joint venture.
Net sales reflected the economic downturn that led to weaker consumer demand
especially in Europe, mainly in the feature phones segment, reinforced by
overall inventory reduction in the handset supply chain.
Wireless
operating losses in the first quarter were $107 million as a consequence of both
the low level of sales and of price pressure on margins, partially offset by
already planned reductions in operating expenses related to the cost synergies
program previously announced by ST-NXP Wireless in November 2008. Noncontrolling
interests of $54 million, mainly related to the ST-Ericsson joint venture, are
posted below operating loss as an income in the Company’s Consolidated Income
Statement.
ST-Ericsson
announced today that a restructuring plan is being launched for immediate
execution and is due to be completed by the second quarter of 2010. This plan is
incremental to the $250 million cost synergies program announced by ST-NXP
Wireless in November 2008. Annualized savings of the new restructuring plan are
expected to be approximately $230 million upon completion. Restructuring costs
are estimated in the range of $70 - 90 million, of which the majority is
expected to be recorded during the second quarter of 2009. The main assumptions
of the restructuring plan are: a re-alignment of product roadmaps to create a
more agile and cost-efficient R&D organization; a reduction in workforce of
1,200 worldwide to reflect further integration activities following the merger,
lower sales volumes and limited visibility on the timing of market
recovery.
For
additional information on ST-Ericsson, see www.stericsson.com
First
quarter 2009 restructuring and impairment charges totaled $56 million and were
mainly related to the phase-out of wafer manufacturing operations in Carrollton,
Texas and assembly operations in Ain Sebaa, Morocco and the Company’s recently
committed cost savings initiatives.
Following
the prior announcements of impairment recognition in certain asset-backed
securities, in the 2009 first quarter an updated accounting valuation resulted
in a further $58 million of pre-tax other-than-temporary impairment charges of
certain financial assets. The Company is currently seeking confirmation from the
United States District Court for the Southern District of New York of an
arbitration award dated February 12, 2009 rendered by The Financial Industry
Regulatory Authority (FINRA). This award orders Credit Suisse Securities (USA)
LLC to pay the Company an amount of approximately $406 million plus interest
against the transfer to Credit Suisse Securities (USA) LLC by the Company of its
entire portfolio of asset-backed securities. At collection, ST will transfer
ownership of its portfolio of unauthorized “auction rate securities” with Credit
Suisse, and should be able to record a pre-tax gain of over $220 million to
reverse impairment losses accrued in the Company’s income statements of prior
periods.
In the
first quarter of 2009, ST registered a non-cash loss on equity investments of
$232 million primarily related to Numonyx including $200 million of impairment
on Numonyx equity investment to reflect further deteriorated conditions in the
memory industry as well as ST’s $29 million share of equity loss on Numonyx's Q4
2008 results. As of March 28, 2009, Numonyx held approximately $440 million in
cash on its balance sheet.
For the
2009 first quarter ST reported a net loss of $541 million, or -$0.62 per share,
compared to a net loss of $366 million and $84 million in the prior quarter and
year-ago period, respectively. On an adjusted basis, ST reported a net loss
excluding impairment, restructuring and OTTI charges of $267 million, or -$0.31
per share(*).
For the
2009 first quarter, the effective average exchange rate for the Company was
approximately $1.33 to €1.00 compared to $1.40 to €1.00 for the 2008 fourth
quarter and $1.47 to €1.00 for the 2008 first quarter.
(*)
Adjusted earnings per share is a non-U.S. GAAP measure. For additional
information please refer to Attachment A..
Mr.
Bozotti commented, “We made solid progress on reducing our costs through the
realignment of manufacturing operations and streamlining of expenses. In the
first quarter, we discontinued manufacturing operations at our Ain Sebaa
assembly plant in Morocco and in mid-April we closed our Carrollton, Texas wafer
fab. Overall, in the first quarter of 2009 we reduced headcount by 3,200,
excluding the wireless transaction. I believe these actions and others
demonstrate that we are well aligned with our goal to reduce costs by over $700
million in 2009 compared to the Company’s 2008 fourth quarter annualized base.
Also, ST-Ericsson just announced an additional restructuring program which is
expected to contribute to the joint venture approximately $230 million in
annualized cost savings at completion by the second quarter of
2010.”
Cash Flow and Balance Sheet
Highlights
First
quarter 2009 cash flow data are estimated following a delayed calendar for the
final closing of the cash flow statement due to the purchase accounting of
acquisitions.
Net
operating cash flow(*) is
estimated at -$136 million for the first quarter 2009, before the cash flow
movements related to M&A transactions that resulted into a net cash flow of
$608 million for the Company plus $400 million for the consolidated ST-Ericsson
joint venture. Net operating cash flow was $154 million in the prior quarter,
and $49 million, or $219 million excluding M&A transactions, in the year-ago
quarter.
Capital
expenditures were $92 million during the first quarter of 2009, compared to $206
million in the prior quarter and $258 million in the year-ago
quarter.
Inventory
was $1.66 billion at quarter end, down from $1.84 billion at December 31, 2008.
The decrease in the inventory was attributable to sharply reduced fab
loadings.The Company expects to continue to reduce inventory and manage a low
level of fab loadings in the second quarter of 2009.
At March
28, 2009, ST’s cash and cash equivalents, marketable securities (current and
non-current), short-term deposits and restricted cash equaled $2.9 billion.
Excluding cash of $358 million related to ST-Ericsson and a $250 million deposit
as collateral for the Company’s Hynix-Numonyx loan and $184 million of
non-current securities the Company’s liquidity totals $2.1 billion. Total debt
was $2.65 billion. ST’s net financial position(*) was
net cash of $254 million from a net debt of $545 million as of December 31,
2008. Total equity was $8.95 billion, including noncontrolling interest of $1.39
billion.
(*) Net
financial position is a non-U.S. GAAP measure. For additional information please
refer to Attachment A.
Business
Outlook
Mr.
Bozotti stated, “It is clear that the global economic environment deteriorated
further during the first quarter of 2009. While we have recently begun to see
some indicators of improvement in booking activity and visibility, we believe it
is still too early to determine how sustainable these signs are across all
applications and geographies.
“We
remain focused on advancing our key priorities for 2009, as we execute on our
ongoing product development, marketing, productivity and cost savings
programs.”
Current
uncertainty in the global financial markets, economic recession in the world’s
major economies, seasonality, and the effect on demand for semiconductor
products in the key application markets and from key customers served by our
products makes it extremely difficult to accurately forecast product demand and
other related matters. Consequently, this quarter the Company will only provide
approximate revenue and gross margin internal planning targets with respect to
the second quarter of 2009. The Company is currently planning for revenues in
the second quarter 2009 to be in the range of $1.73 billion to $1.93 billion. As
ST continues its efforts to reduce inventory levels during this timeframe, fab
loading will run at levels of about 50%, driving gross margin to an
extraordinary low level which the Company is planning for internal purposes to
be in the mid 20s, as
a
percentage of sales. Gross margin is subject to changes in demand levels and
pricing that could impact fab loading, inventory write-offs, mix and unit costs,
and combined with currency fluctuations could potentially create additional
margin variability.
Key Information on
Consolidation / Deconsolidation
ST
completed the deconsolidation of its Flash Memory Group (FMG) segment and took
an equity interest in Numonyx on March 30, 2008, which is reported under the
equity method of valuation with an anticipated one quarter lag in
reporting.
ST-NXP
Wireless, a joint venture initially owned 80% by ST, began operations on August
2, 2008 and was fully consolidated into ST’s operating results. On February 1,
2009 and prior to the closing of
the merger of ST-NXP Wireless and Ericsson Mobile Platforms to create
ST-Ericsson, ST exercised its option to buyout NXP’s 20% ownership stake of
ST-NXP Wireless.
ST-Ericsson,
a joint venture owned 50% by ST, began operations on February 2, 2009 and is
consolidated into ST’s operating results as of that date. ST-Ericsson will be
led by a development and marketing company. This company will be consolidated by
ST. A separate platform design company will provide platform designs mostly to
the development and marketing company and ST will account for it using the
equity method.
Recent Corporate
Developments
On April
16, ST announced the main resolutions to be submitted for shareholder approval
at the Company’s Annual General Meeting, which will be held in Amsterdam on May
20, 2009. The main resolutions, proposed by the Supervisory Board,
include:
|
·
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Approval
of the Company's 2008 accounts reported in accordance with International
Financial Reporting Standards
(IFRS);
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·
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The
reappointment for a three-year term, expiring at the 2012 Annual General
Meeting, for the following members of the Supervisory Board: Mr. Doug Dunn
and Mr. Didier Lamouche; and
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·
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The
distribution of a cash dividend of US$0.12 per share, to be paid in four
equal quarterly installments in May, August and November 2009 and February
2010 to shareholders of record in the month of each quarterly payment. If
approved, for the first installment, the Company's common shares will
trade ex-dividend on Euronext Paris and the Milan Stock Exchange (Borsa
Italiana), on Monday, May 25, 2009, and the payment date will be Thursday,
May 28, 2009. For holders of shares listed on the New York
Stock Exchange, shares will trade ex-dividend on Friday, May 22, 2009, the
record date will be Wednesday, May 27, 2009, and the payment date will be
on or after Tuesday, June 2, 2009. Transfers between New York
and European (Dutch) registered shares will be closed from the end of
business in Europe on Friday, May 22, 2009, until the open of business in
New York on Thursday, May 28, 2009.
|
On March
30, ST announced the completion of
a $500 million medium-term committed credit-facilities program as part of its
ongoing efforts to improve liquidity and enhance financial
flexibility.
At the
end of March, the French Ministry of Economy, Industry and Employment and ST
signed the framework agreement of the “Nano2012” Research and Development
program which confirmed ST as the Coordinator and Project Leader and allocated
to the Company Euro 340 million (about $450 million USD) in grants for the
period 2008-2012.
On
February 12, 2009, an arbitration panel of the Financial Industry Regulatory
Authority (FINRA) awarded ST, in its dispute with Credit Suisse Securities (USA)
LLC, an amount of approximately $406 million comprising compensatory damages, as
well as interest, attorney's fees, and consequential damages, against the
transfer by ST to Credit Suisse Securities (USA) LLC of its entire portfolio of
asset-backed securities. In addition, ST is entitled to retain the approximately
$25 million interest amount which had already been paid on the portfolio. The
securities, with a par value of $415 million, are at the end of the first
quarter of 2009 carried on the books as non-current
financial
assets at a value of $184 million, as the result of various impairment
charges recorded against income. ST is currently seeking enforcement of the
FINRA arbitration award in the United States District Court for the Southern
District of New York.
On February 3, STMicroelectronics and
Ericsson announced the closing of their agreement merging Ericsson Mobile
Platforms and ST-NXP Wireless into a 50/50 joint venture. The transaction was
completed on the terms originally announced on August 20, 2008. The JV begins as
a major supplier to four of the industry’s top five handset manufacturers, who
together represent about 80 percent of global handset shipments, as well as to
other industry leaders. Ericsson contributed $1.1 billion net to the joint
venture, out of which $0.7 billion was paid to ST. Prior to the closing of the
transaction, ST exercised its option to buyout NXP’s 20 percent ownership stake
of ST-NXP Wireless for a price of $92 million.
Q1 2009 Products, Technology
and Design Wins
Automotive, Consumer,
Computer and Telecom Infrastructure (ACCI)
Product
Highlights
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·
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In
automotive powertrain and safety applications, ST expanded its market
share for 32-bit microcontrollers (MCUs) based on the PowerPC architecture
with significant design wins for next-generation products, including: an
airbag platform from a major European player for use by car makers in
Europe and the US; an airbag platform from a tier-one Japanese customer
targeting the mid- to low-end market in China; and an ABS platform from
another Japanese tier-one OEM. In addition, ST is also to supply smart
power products for these design
wins.
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·
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In
car-body applications, ST gained an important design win from a major
Korean OEM for a smart junction-box application for devices including
application-specific automotive ICs, 8-bit STM8A MCUs and VIPower™ chips.
ST also gained a design win for a new generation of actuator ICs for
controlling door locks, electric windows and mirrors, from a leading
European car maker, in addition to multiple wins for its STM8A MCU in
various applications in many new car
platforms.
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·
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In
car radios and multimedia, ST’s next-generation digital audio and
connectivity processor has been selected by two major European car radio
makers for their Model Year 2012 platforms. Additionally, ST’s GPS
technology was selected by a major system maker for telematics
applications in South America. ST also received orders for its Cartesio
automotive application processor from a major European OEM for a
telematics box to be used by a European car
maker.
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·
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In
consumer applications, ST introduced two single-chip set-top-box (STB)
ICs, the STi5197 for cable STBs and STi5189 for satellite STBs. The chips
enable efficient development and fast time-to-market for products such as
basic zappers, interactive and Digital Video Recorder (DVR) capable STBs,
and hybrid STBs. ST also announced its energy-saving STB architecture,
which has already been implemented in several of the company’s
leading-edge STB decoders.
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Additionally,
ST also received two important product certifications: the STV0498 STB IC
has been certified by CableLabs Europe, allowing deployment in interactive
STBs for cable TV networks; and ST gained an industry first with
certification for the latest revision of the DisplayPort Compliance
standard for two products, including the recently announced STDP3100
DisplayPort-to-VGA converter.
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·
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In
consumer audio, ST began shipments of three new Sound Terminal
products embedding ST’s proprietary FFX digital amplification technology
to world-leading makers of home audio systems and LCD
TVs.
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In
imaging, ST introduced the market’s first quarter-inch optical-format,
3-megapixel sensors with Extended-Depth-of-Field (EDoF) capabilities.
Enabling camera modules as small as 6.5 x 6.5mm, the sensors combine
high-quality images with size and cost benefits, offering an alternative
to auto-focus camera solutions.
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In
computer peripherals, ST gained a design win for a next-generation motor
controller IC, using the company’s proprietary BCD process, from a leading
hard-disk-drive maker for enterprise
applications.
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·
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In
communications infrastructure applications, ST gained a design win for
ASICs that will be used by a world-leading manufacturer in its
enterprise-switching networking
products.
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Industrial and Multi-Segment
(IMS) Product Highlights
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·
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In
32-bit microcontrollers, ST added another new line to its breakthrough
32-bit STM32 ARM Cortex-M3 based MCU family. The STM32 Connectivity Line
offers high-performance variants with Ethernet, CAN and full-speed USB
On-The-Go interfaces. ST also introduced the STM32 Primer2 prototyping
tool, which adds a rich range of features for embedded
design.
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In
8-bit MCUs, ST announced the general availability of the robust and
reliable STM8S105 and STM8S207 for industrial and consumer applications.
Additionally, ST unveiled its open-source capacitive touch-sensing
software library for its 8-bit STM8 MCU platform to enable easy
implementation of touch-sensitive
controls.
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In
MEMS (Micro Electro-Mechanical Systems), ST announced that its 3-axis
accelerometer technology is providing motion-sensing functions in
Openmoko’s Neo Freerunner Linux-based mobile open platform. Also, ST
expanded its portfolio of ultra-compact high-performance MEMS sensors with
a 3-axis accelerometer, with absolute analog output, which is ideal for
motion-sensing applications in space- and cost-constrained
battery-operated devices. ST also gained design wins for its
motion-sensing technology from a major US laptop maker and in many
consumer and communications applications from customers in China and
Taiwan.
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In
power discretes, ST announced a performance breakthrough for power MOSFETs
by achieving the best on-resistance per die area with its MDmesh™ V
technology. ST also introduced a series of 30V power transistors, based on
its STripFET™ VI DeepGATE™ process, achieving an increase in energy
efficiency in applications such as computers and telecom and networking
equipment. ST also gained numerous power MOSFET design wins, largely in
LCD TV applications, in particular from a major Korean TV maker, but also
with leading automotive and computer
customers.
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In
protection devices, ST introduced various innovative ultra-low-capacitance
ESD (electro-static discharge) protection and signal-booster devices
dedicated to HDMI transmitters, mobile phones, digital cameras and PVRs
(Personal Video Recorders). In the power management area, ST gained market
success with avalanche-rated Power Schottky devices for adapters and
desktop power supplies. And in power conversion, ST gained design wins for
voltage regulator and power-controller devices in computer and
industrial-lighting applications.
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In
advanced analog, ST gained design wins in temperature sensors and smart
reset ICs and also sampled clock-distribution ICs to numerous
world-leading mobile phone makers. In analog linear ICs, ST launched new
devices including: a two-channel 2.8W class-D stereo audio amplifier IC
featuring 3D effects to improve sound in portable equipment; a new
broadband signal amplifier IC for multimedia networking applications; and
a single-chip video filter/buffer for consumer products. ST also achieved
multiple design wins for linear devices with world-leading consumer and
mobile phone makers.
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Technology
Highlights
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·
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ST
entered into a strategic cooperation with Paratek to supply
radio-frequency (RF) tunable products for mobile phones using STs’ IPAD
(Integrated Passives and Active Devices) technology. The two companies
will advance the next generation of Paratek’s ParaScan materials
technology for high-volume manufacturing, and will develop RF tunable
products to improve ‘total radiated power’ for mobile phones, leading to
longer battery life and fewer dropped
calls.
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ST-Ericsson
Highlights
|
·
|
On
February 12, 2009, ST-Ericsson was formally launched revealing its name,
management team and positioning.
|
|
·
|
In
February, the company announced its cooperation with Nokia to provide a
next-generation smart phone platform for Symbian Foundation, with a
reference platform based on ST-Ericsson’s U8500 single
chip.
|
|
·
|
Also
in February the company announced its collaboration with ARM to
demonstrate the world’s first Symmetric Multi Processing mobile platform
technology running on Symbian OS.
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|
·
|
In
March, the company launched fully integrated single-chip solutions for
feature-rich, low-cost handsets. ST-Ericsson’s 4910 and 4908 EDGE
platforms combine the industry’s highest level of integration and
cost-efficiency, with both digital and analog basebands, RF transceiver
and power management unit (PMU) in a single
chip.
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|
·
|
A
next-generation mobile audio digital-to-analog converter (DAC) for the
mobile music market was also launched. ST-Ericsson’s STw5211 further
extends the company’s wide portfolio of audio solutions with enhanced
performance.
|
All of
STMicroelectronics’ press releases (including all releases in Q1) are available
at www.st.com/stonline/press/news/latest.htm. All of ST-Ericsson’s press
releases (including all releases in Q1) are available at
http://www.stericsson.com/press/press_releases.jsp
DeepGATE,
MDmesh, STripFET and VIPower are trademarks of STMicroelectronics. All other
trademarks or registered trademarks are the property of their respective
owners.
Use of Supplemental Non-U.S.
GAAP Financial Information
This
press release contains supplemental non-U.S. GAAP financial information,
including adjusted gross profit (margin) or operating income,
adjusted net earnings/loss per share, net operating cash flow and net financial
position.
Readers
are cautioned that these measures are unaudited and not prepared in accordance
with U.S. GAAP and should not be considered as a substitute for U.S. GAAP
financial measures. In addition, such non-U.S. GAAP financial measures may not
be comparable to similarly titled information by other companies.
See
Attachment A of this press release for a reconciliation of the Company’s
non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial
measures. To compensate for these limitations, the supplemental non-U.S. GAAP
financial information should not be read in isolation, but only in
conjunction with the Company’s consolidated financial statements prepared in
accordance with U.S. GAAP.
Forward-looking
information
Some
of the statements contained in this release that are not historical facts are
statements of future expectations and other forward-looking statements (within
the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the
Securities Exchange Act of 1934, each as amended) that are based on management’s
current views and assumptions, and are conditioned upon and also involve known
and unknown risks and uncertainties that could cause actual results, performance
or events to differ materially from those in such statements due to, among other
factors:
|
·
|
Effect of the current economic
downturn on demand in the key application markets and from key
customers served by our products, and changes in customer order patterns,
including order cancellations, all of which generate uncertainties
and make it extremely difficult to accurately forecast and plan
our future business
activities;
|
|
·
|
our ability to adequately
utilize and operate our manufacturing facilities at sufficient levels to
cover fixed operating costs particularly at a time of decreasing demand
for our products as well as the financial impact of obsolete or
excess inventories if actual demand differs from our
anticipations;
|
|
·
|
the impact of intellectual
property claims by our competitors or other third parties, and our ability
to obtain required licenses on reasonable terms and
conditions;
|
|
·
|
the outcome of ongoing
litigation as well as any new litigation to which we may become a
defendant;
|
|
·
|
our ability to successfully
integrate the acquisitions we pursue, in particular the merger of ST-NXP
Wireless with Ericsson Mobile Platforms (“EMP”) to form ST-Ericsson in the
current difficult economic
environment;
|
|
·
|
we hold significant
non-marketable equity investments in Numonyx , our joint venture in the
flash memory market segment, and in ST-Ericsson, our joint venture in the
wireless segment. Additionally, we are a guarantor for certain Numonyx
debts. Therefore, declines in these market segments could result in
significant impairment charges, restructuring charges and gains/losses on
equity investments;
|
|
·
|
our ability to manage in an
intensely competitive and cyclical industry, where a high percentage of
our costs are fixed and are incurred in currencies other than U.S. dollars
as well as our ability to execute our restructuring initiatives in
accordance with our plans if unforeseen events require adjustments or
delays in implementation;
|
|
·
|
our ability in an intensively
competitive environment to secure customer acceptance and to achieve our
pricing expectations for high-volume supplies of new products in whose
development we have been, or are currently,
investing;
|
|
·
|
the ability to maintain solid,
viable relationships with our suppliers and customers in the event they
are unable to maintain a competitive market presence due, in particular,
to the effects of the current economic
environment;
|
|
·
|
changes in the political,
social or economic environment, including as a result of military
conflict, social unrest and/or terrorist activities ,economic
turmoil as well as natural events such as severe weather,
health risks, epidemics or earthquakes in the countries in which we, our
key customers or our suppliers, operate;
and
|
|
·
|
changes in our overall tax
position as a result of changes in tax laws or the outcome of tax audits,
and our ability to accurately estimate tax credits, benefits, deductions
and provisions and to realize deferred tax
assets.
|
Such
forward-looking statements are subject to various risks and uncertainties, which
may cause actual results and performance of our business to differ materially
and adversely from the forward-looking statements. Certain forward-looking
statements can be identified by the use of forward-looking terminology, such as
“believes”, “expects”, “may”, “are expected to”, “will”, “will continue”,
“should”, “would be”, “seeks” or “anticipates” or similar expressions or the
negative thereof or other variations thereof or comparable terminology, or by
discussions of strategy, plans or intentions. Some of these risk factors are set
forth and are discussed in more detail in “Item 3. Key Information — Risk
Factors.” included in our Annual Report on Form 20-F for the year ended December
31, 2007, as filed with the SEC on March 3, 2008. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described in this
release as anticipated, believed or expected. We do not intend, and do not
assume any obligation, to update any industry information or forward-looking
statements set forth in this release to reflect subsequent events or
circumstances.
Unfavorable
changes in the above or other factors listed under “Risk Factors” from time to
time in our Securities and Exchange Commission (“SEC”) filings, including our
Form 20-F, could have a material adverse effect on our business and/or financial
condition.
STMicroelectronics
Conference Call and Webcast Information
The
management of STMicroelectronics will conduct a conference call and webcast on
April 30, 2009 at 9:00 a.m. U.S. Eastern Time / 3:00 p.m. CET, to discuss its
operating performance for the first quarter of 2009.
The
conference call and webcast will be available via the Internet by
accessing: http://investors.st.com.
Those accessing the webcast should go to the Web site at least 15 minutes prior
to the call, in order to register, download and install any necessary audio
software. The webcast and conference call will be available until May 8,
2009.
ST-Ericsson Conference Call
and Webcast Information
The
management of ST-Ericsson will conduct a conference call on April 30, 2009 at
7:00 a.m. U.S. Eastern Time / 1:00 p.m. CET to discuss the Company’s performance
for the first quarter of 2009.
Access to
the audio webcast of the Conference Call will be available via the Internet by
accessing the following web address: http://www.stericsson.com/investors/investors.jsp
About
STMicroelectronics
STMicroelectronics is a global leader
in developing and delivering semiconductor solutions across the spectrum of
microelectronics applications. An unrivalled combination of silicon and system
expertise, manufacturing strength, Intellectual Property (IP) portfolio and
strategic partners positions the Company at the forefront of System-on-Chip
(SoC) technology and its products play a key role in enabling today’s
convergence markets. The Company's shares are traded on the New York Stock
Exchange, on Euronext Paris and on the Milan Stock Exchange. In 2008, the
Company’s net revenues were $9.84 billion. Further information on ST can be
found at www.st.com.
(tables
attached)
For further information,
please contact:
INVESTOR
RELATIONS:
Tait
Sorensen
Director,
Investor Relations
Tel: +1
602 485 2064
MEDIA
RELATIONS:
Maria
Grazia
Prestini
Senior
Director, Corporate Media and Public Relations
STMicroelectronics
Tel: + 41
22 929 6945
Attachment
A
STMicroelectronics
Supplemental
Non-U.S. GAAP Financial Information
U.
S. GAAP – Non-U.S. GAAP Reconciliation
In
Million US$ Except Per Share Data
Readers
are cautioned that the supplemental non-U.S. GAAP information presented in this
press release is unaudited and subject to inherent limitations. Such non-U.S.
GAAP information is not based on any comprehensive set of accounting rules or
principles and should not be considered as a substitute for U.S. GAAP
measurements. Also, our supplemental non-U.S. GAAP financial information may not
be comparable to similarly titled non-U.S. GAAP measures used by other
companies. Further specific limitations for individual non-U.S. GAAP measures,
and the reasons for presenting non-U.S. GAAP financial information, are set
forth in the paragraphs below. To compensate for these limitations, the
supplemental non-U.S. GAAP financial information should not be read in
isolation, but only in conjunction with our consolidated financial statements
prepared in accordance with U.S. GAAP.
Adjusted
gross profit (margin) or operating income is used by our management to help
enhance an understanding of ongoing operations and to communicate the impact of
the excluded items. Adjusted gross profit (margin) or operating
income exclude impairment, restructuring charges and other related closure
costs, the impact of purchase accounting (such as in-process R&D costs and
inventory step-up charges) and related tax effects.
Adjusted
earnings per share is used by our management to help enhance an understanding of
ongoing operations and to communicate the impact of the excluded items. Adjusted
earnings exclude impairment, restructuring charges and other related closure
costs, the impact of purchase accounting (such as in-process R&D costs and
inventory step-up charges), other-than-temporary impairment (OTTI) charge on
financial assets, and impairment related to equity investments, net of the
relevant tax impact.
(more)
(Attachment
A – continued)
Q1
2009
|
Gross
Profit
|
Operating
Income
|
Net
Earnings
|
Corresponding
EPS
|
U.S.
GAAP
|
437
|
(393)
|
(541)
|
(0.62)
|
Impairment
& Restructuring
|
|
56
|
56
|
|
Other-Than-Temporary-Impairment
|
|
|
58
|
Numonyx
Impairment
|
|
|
200
|
Estimated
Income Tax Effect
|
|
|
(40)
|
Non-U.S
GAAP
|
437
|
(337)
|
(267)
|
(0.31)
|
Q4
2008
|
Gross
Profit
|
Operating
Income
|
Net
Earnings
|
Corresponding
EPS
|
U.S.
GAAP
|
822
|
(139)
|
(366)
|
(0.42)
|
NXP
Wireless Inventory Step-Up
|
31
|
31
|
31
|
|
Impairment
& Restructuring
|
|
91
|
91
|
Other-Than-Temporary-Impairment
|
|
|
55
|
Numonyx
Impairment
|
|
|
180
|
Estimated
Income Tax Effect
|
|
|
(48)
|
Non-U.S
GAAP
|
853
|
(17)
|
(57)
|
(0.06)
|
Q1
2008
|
Gross
Profit
|
Operating
Income
|
Net
Earnings
|
Corresponding
EPS
|
U.S.
GAAP
|
899
|
(88)
|
(84)
|
(0.09)
|
Genesis
In-Process R&D
|
|
21
|
21
|
|
Impairment
& Restructuring
|
|
183
|
183
|
Other-Than-Temporary-Impairment
|
|
|
29
|
Estimated
Income Tax Effect
|
|
|
(33)
|
Non-U.S
GAAP
|
899
|
116
|
116
|
0.13
|
(more)
(Attachment
A – continued)
Net
operating cash flow is defined as net cash from operating activities minus net
cash used in investing activities, excluding payment for purchases of and
proceeds from the sale of marketable securities (both current and non-current),
short-term deposits and restricted cash. We believe net operating cash flow
provides useful information for investors and management because it measures our
capacity to generate cash from our operating and investing activities to sustain
our operating activities. Net operating cash flow is not a U.S. GAAP measure and
does not represent total cash flow since it does not include the cash flows
generated by or used in financing activities. In addition, our definition of net
operating cash flow may differ from definitions used by other companies. First
quarter 2009 cash flow data are not provided below, following a delayed calendar
for the final closing of the cash flow statement due to the purchase accounting
of acquisitions.
Net
Operating Cash Flow (US$ and in millions)
|
Q4
2008
|
Q1
2008
|
Net
cash from operating activities
|
390
|
502
|
Net
cash used in investing activities
|
-172
|
-453
|
Proceeds
from sale of marketable securities
|
-64
|
0
|
Net
operating cash flow
|
154
|
49
|
Net
operating cash flow (ex M&A)
|
161
|
219
|
Net
financial position: resources (debt), represents the balance between our total
financial resources and our total financial debt. Our total financial resources
include cash and cash equivalents, current and non-current marketable
securities, short-term deposits and restricted cash, and our total financial
debt include bank overdrafts, the current portion of long-term debt and
long-term debt, all as represented in our consolidated balance sheet. We believe
our net financial position provides useful information for investors because it
gives evidence of our global position either in terms of net indebtedness or net
cash by measuring our capital resources based on cash, cash equivalents and
marketable securities and the total level of our financial indebtedness. Net
financial position is not a U.S. GAAP measure.
Net
Financial Position (US$ and in millions)
|
Q1
2009
|
Q4
2008
|
Q1
2008
|
Cash
and cash equivalents
|
1,480
|
1,009
|
2,060
|
Marketable
securities, current
|
988
|
651
|
1,060
|
Restricted
cash
|
250
|
250
|
250
|
Marketable
securities, non-current
|
184
|
242
|
339
|
Total
cash position
|
2,902
|
2,152
|
3,709
|
Bank
overdrafts
|
-3
|
-20
|
0
|
Current
portion of long-term debt
|
-159
|
-123
|
-300
|
Long-term
debt
|
-2,486
|
-2,554
|
-2,324
|
Total
financial debt
|
-2,648
|
-2,697
|
-2,624
|
Net
financial position
|
254
|
-545
|
1,085
|