SemiOT:STMicroelectronics Cuts Forecasts,Feeling Weakness in Telecom Sector
WSJI
PARIS -- Weakness in the telecommunications and computer markets spilled over and claimed another victim Thursday as French-Italian semiconductor maker STMicroelectronics NV cut its revenue and margin projections for its current quarter.
The world's sixth-largest chip maker now expects second-quarter revenue of $1.55 billion to $1.6 billion (1.82 billion euros to 1.88 billion euros), below its earlier revenue forecast of $1.65 billion to $1.8 billion. At $1.55 billion, revenue would be 17% less than the $1.877 billion in sales that STMicroelectronics posted during the same quarter last year.
STMicro Cuts Its Capital Budget, Plans to Eliminate Jobs in Ottawa (May 31)
STMicro Reports Profit Jumped in First Quarter, but Warns of Slowdown (April 19)
The company now estimates its second-quarter gross margin at 38%, compared with its April estimate of between 40% and 42%, and the nearly 47% it posted in the same quarter last year.
In Paris trading Thursday, STMicroelectronics shares fell 4.2%, or 1.70 euros, to 38.52 euros.
The chip maker's revised projections follow a profit warning by once-optimistic Finnish wireless-handset maker Nokia Corp. earlier this week and similar announcements by other companies in the wireless, networking, and computer-hardware sectors. About 13% of STMicroelectronics' sales came from Nokia last year.
On Thursday, STMicroelectronics predicted that second-quarter revenue from chips used in telecom devices, computer peripherals and smart cards would be lower both than the previous quarter and the same quarter last year. It said sales from memory products will be lower than the previous quarter, and sales related to digital consumer products will be similar to the first quarter of this year.
At the same time, other chip makers have suggested recently that they believe the chip market may have hit its bottom. Intel Corp. of the U.S. said last week it was starting to see signs of stability in its microprocessor business and that it expects overall demand to pick up later in the year.
World-wide sales of computer chips are expected to fall 14% this year to $175 billion, but then rise 21% in 2002, according to the Semiconductor Industry Association.
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STM is similar in product breath to ADI, although they are bigger. I might expect some additional guidance from ADI regarding future rev.
Jim |
