Bloomberg News

ST-Ericsson Third-Quarter Loss Widens as Sales Slump 27 Percent

October 19, 2011

Oct. 20 (Bloomberg) -- ST-Ericsson, the semiconductor joint venture between Ericsson AB and STMicroelectronics NV, said its third-quarter loss widened as sales slumped.

The loss was $211 million, compared with a loss of $121 million a year earlier, the Geneva-based company said in a statement yesterday. Sales fell 27 percent to $412 million from $565 million. In July, the company had forecast revenue would be “about flat sequentially” from $385 million in the second quarter as gains from new products were outweighed by lower sales of older ones.

“Our financial performance continues to be challenging, but in addition to growing sales of new products, we’re on plan to execute the cost-saving measures announced in June,” Chief Executive Officer Gilles Delfassy said in the statement.

ST-Ericsson, which makes chips for mobile phones, has struggled to post a profit since it was formed in 2009. The company is working on a line of processors for smartphones, the fastest-growing handset category, amid declines in its older business of chips for mid-priced feature phones. ST-Ericsson’s clients include Nokia Oyj and Samsung Electronics Co., the world’s top two handset makers.

ST-Ericsson announced cost cuts aimed at saving $120 million a year in June and dropped its target date to become profitable. The cuts will affect as many as 500 jobs, the company said. The venture previously predicted breaking even in the second quarter of 2012.

ST-Ericsson expects sales in the fourth quarter to “be slightly up sequentially,” the company said yesterday.

--Editor: Thomas Mulier, Jillian Ward

To contact the reporter on this story: Chiara Remondini in Milan at cremondini@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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