Infineon's Loss Narrows, But Misses Estimates; Shares Trading Lower

Infineon Technologies reported a smaller Q2 net loss of €11 million ($15m), or -€0.01/share, compared to -€26m (-€0.03/share) last year, but still missed analysts' average estimate of €0.05/share. Revenues declined 2% to €1.96b, also falling short of analysts' forecast (€2b). This was its eighth quarterly loss in nine, but MarketWatch reports Goldman Sachs told clients: "The positive takeaway in this earnings report is that the company is now profitable on an operational basis and outlook for the company suggests continued improvements." Infineon took a restructuring charge of €54m. It expects to break even (ex-Qimonda and before interest and tax) this fiscal year. Ordinary shares of Infineon trading in Frankfurt were last down 2% to €11.70. Infineon's ADRs gained 2.2% to $16.33 yesterday, renewing a 52-week high -- its highest close since July 2002. Regarding an expected divestiture of memory-chip maker Qimonda, in which it owns an 86% stake, CEO Wolfgang Ziebart said there is "no need" to sell shares "at the moment." Qimonda accounts for around half of Infineon's revenues. Qimonda reported earlier this week, returning to profitability with earnings of €57m (vs. -€9m) on sales of €984m (+6%).

Sources: Press release, Bloomberg, MarketWatch
Commentary: Infineon Shares Up on Report of Buyout Interest • Infineon Chips to Be Used in Nokia's New Entry Level Phones • Infineon Technologies Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Infineon Technologies AG (IFX), Qimonda AG (QI). Competitors: STMicroelectronics NV (STM), Texas Instruments (TXN), Micron (MU), Fairchild Semiconductor Intl. (FCS), International Rectifier (IRF), Broadcom (BRCM)

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