STMicroelectronics reported a second-quarter loss of $758M ($0.84/share) as revenue fell 3.2% and the chipmaker took $906M in charges. Revenue dropped to $2.41B from $2.49B. The write-down related to assets transferred to a flash-memory joint-venture with Intel. Excluding the charges, profit of $139M ($0.15/share) met analyst estimates, although revenue was shy of the $2.46 billion consensus. Last year the Geneva-based company posted earnings of $168M ($0.18/share). The company had forecast a 4-10% sequential rise in revenue and that gross margin would remain in a range 34-36% range. Gross margin was 34.7% compared with 35.4% last year. Looking ahead, STM expects sequential sales growth in a 2-7% range in Q3, and that gross margin will expand to about 35.5%. Separately, STM agreed to collaborate with IBM on the development of chip technology, including work on higher density and higher performance processors. Shares have lost 5.7% over the past three days, and are down another 3.5% in early pre-market trading. The company's earnings conference call is scheduled for 9 a.m. (see transcript later today).
Sources: Press release, Reuters, Bloomberg, Dow Jones
Commentary: Intel and STMicroelectronics: The Art of the Deal • ST Micro: Can iPhone Orientation Sensor Point the Way To Improved Financials?
Stocks/ETFs to watch: ST Microelectronics N.V. (NYSE:STM). Competitors: Texas Instruments Inc. (NYSE:TXN), Infineon Technologies AG (IFX), Marvell Technology Group (NASDAQ:MRVL). ETFs: HOLDRS Semiconductors (NYSEARCA:SMH), iShares Goldman Sachs Semiconductor Index Fund (IGW), PowerShares Dynamic Semiconductor (NYSEARCA:PSI)
Earnings call transcript: STMicroelectronics Q1 2007
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