* Net sales $728 million; 9% sequential increase
* Adjusted operating loss[1] $77 million; results improved compared
to prior quarter
* Integrated product strategy endorsed by customers
Geneva, Switzerland, October 20, 2009 - ST-Ericsson, a joint venture
of STMicroelectronics (NYSE:STM) and Ericsson (NASDAQ:ERIC), reports
financial results for the third quarter 2009.
President and CEO, Alain Dutheil, commented: "During the third
quarter sales were up 9%.
Our focus on tight cost control and on completing the integration has
started to improve results, and the remaining restructuring plan
continues to progress according to schedule.
Customers and partners are endorsing our integrated solutions
portfolio. We are experiencing good momentum with key customers for
our U8500, the industry's first open OS 3G/HSPA single chip
smartphone platform. We have also reinforced strategic relationships
with key players in the computing market, such as Dell and Hojy,
centered around our modem portfolio.
The company is progressing on the target to become a solid and
profitable leader in the wireless semiconductor market and will
continue this challenge, led by the recognized competence and
expertise of Gilles Delfassy who will assume the President and CEO
position on November 2, 2009."
Financial highlights (unaudited)
+-------------------------------------------------------------------+
| | Q3 2009 | Q2 2009 | Q3 2008 |
| $ million | | | PRO-FORMA |
|-----------------------------+---------+---------------+-----------|
| Income Statement | | | |
|-----------------------------+---------+---------------+-----------|
| NET SALES | 728 | 666 | 1003 |
|-----------------------------+---------+---------------+-----------|
| OPERATING INCOME/(LOSS) | | | |
| ADJUSTED[1] for: | (77) | (165) | (34) |
|-----------------------------+---------+---------------+-----------|
| - amortization of | | | |
| acquisition-related | | | |
| intangibles | (25) | (24) | (25) |
|-----------------------------+---------+---------------+-----------|
| | | | |
| - restructuring charges | (19) | (35) | 0 |
|-----------------------------+---------+---------------+-----------|
| OPERATING INCOME / (LOSS) | | | |
| as reported | (121) | (224) | (59) |
|-----------------------------+---------+---------------+-----------|
| NET INCOME / (LOSS) | (112) | (213) | NA |
+-------------------------------------------------------------------+
Net sales were better than normal seasonal patterns and showed a
sequential progress of 9%, with solid performance in Asia.
The $77 million operating loss, excluding amortization of
acquisition-related intangibles and restructuring charges, compares
to a $165 million operating loss in the second quarter 2009. The
reduced loss reflects a tight control of product costs and
operational expenses and it includes positive seasonal effects.
The positive trend on inventory management continued in the third
quarter, due to increased efficiency in the supply chain as well as
cost reductions. Inventory reached $277 million, with a sequential
decline of $48 million.
Net cash[2] was $216 million at the end of third quarter 2009.
Update on restructuring plans
The $250 million cost synergies program defined by ST-NXP Wireless
was substantially completed at the end of the quarter while the $230
million restructuring plan, announced by ST-Ericsson on April 29,
2009 and currently in progress, had a limited benefit to the third
quarter results.
Market evolution
"While visibility on the medium term business environment remains
poor, seasonal market trends are likely to be confirmed in the fourth
quarter, where we expect Asia will again be one of the main drivers,"
said Alain Dutheil.
Q3 2009 highlights - products, technology and wins
During the quarter, an additional top tier manufacturer has selected
ST-Ericsson's U8500 platform for its smartphone development.
In September, ST-Ericsson and Dell signed a strategic relationship
agreement to bring high-speed mobility to the Chinese computing
market. The recently launched Dell Inspiron Mini 10 Netbook is based
on ST-Ericsson's TD-HSPA platform, T7210. As part of the agreement,
Dell and ST-Ericsson will extend their cooperation to other devices
based on the next generation TD-SCDMA platform solutions from
ST-Ericsson.
The company also extended its cooperation with Hojy Wireless, which
selected ST-Ericsson's dual-mode TD-HSPA/EDGE flexible modem, M6718,
to develop their next generation of high-speed mobile broadband
modules to power data cards, USB dongles, notebooks and smartphones
in China.
In September, ST-Ericsson announced the world's smallest solution for
connectivity on mobile handsets: the CG2900, the world's first 45 nm
single-chip solution for Bluetooth, FM and GPS. ST-Ericsson also
introduced a new highly integrated ultra-low power Wireless LAN
device, the CW1100.
The company also continued to drive innovation in the TD market by
delivering the industry's first TD-HSPA modem chip samples in 65nm.
Footnotes
[1] The adjusted operating loss is defined as the operating loss
reported before amortization of acquisition-related intangibles and
restructuring charges and is used by management to help enhance the
understanding of ongoing operations and to communicate the impact of
the items on the operating loss as reported.
[2] Net cash is defined as cash and cash equivalents, marketable
securities, short term deposits less total debt
Notes to editors
ST-Ericsson invites analysts and investors to a conference call
scheduled on Oct 21 at 1:00 P.M. CET. Call-in numbers and live
webcasts of the conference calls as well as supporting slides will be
available at http://www.stericsson.com/investors/investors.jsp.
About ST-Ericsson
ST-Ericsson is a world leader in developing and delivering a complete
portfolio of innovative mobile platforms and cutting-edge wireless
semiconductor solutions across the broad spectrum of mobile
technologies. The company is a leading supplier to the top handset
manufacturers and ST-Ericsson's products and technologies enable more
than half of all phones in use today. The company generated
pro-forma sales of about $3.6 billion in 2008. ST-Ericsson was
established as a 50/50 joint venture by STMicroelectronics (NYSE:STM)
and Ericsson (NASDAQ:ERIC) in February 2009, with headquarters in
Geneva, Switzerland. More information about ST-Ericsson is available
at www.stericsson.com.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Global Communications & Media Investor Relations
Relations
Claudia Levo, Geneva, Fabrizio Rossini, Geneva, Switzerland
Switzerland
Jana Mancova, Geneva,
Switzerland
Phone: +41 22 930 2733 Phone: +41 22 929 6973
Email: Email: investor.relations@stericsson.com
media.relations@stericsson.com
Kristina Embring Klang, Lund,
Sweden
Phone: +46 10 713 5058
Email:
media.relations@stericsson.com
Ericsson Investor Relations STMicroelectronics Investor Relations
Gary Pinkham, Stockholm, Sweden Tait Sorensen, Phoenix AZ, US
Phone: +46 10 719 0858 Phone: +1 602 485 2064
Susanne Andersson, Stockholm, Celine Berthier, Geneva, Switzerland
Sweden
Phone: +46 10 719 4631 Phone: +41 22 929 5812
E-mail: Email: investors@st.com
investor.relations@ericsson.com
###
The ST-Ericsson results reported in this press release do not reflect
in their entirety the results of the Wireless Segment of
STMicroelectronics, which include other activities that are not part
of ST-Ericsson.
###
This press release contains forward-looking statements that involve
inherent risks and uncertainties. We have identified certain
important factors that may cause actual results to differ materially
from those contained in such forward-looking statements. For a
detailed description of risk factors see STMicroelectronics'
(NYSE:STM) and Ericsson's (NASDAQ:ERIC) filings with the US
Securities and Exchange Commission, particularly each company's
latest published Annual Report on Form 20-F.
