STMicro believes industry will 'bottom-out ' in Q3, but warns of poor visibility
Semiconductor Business News
(07/12/01 08:45 a.m. EST)
GENEVA--STMicroelectronics today posted a net income of $154.5 million on second-quarter revenues of $1.59 billion after taking $319 million in charges, after taxes, for excess chip inventories and restructuring of its manufacturing operations. The company however topped Wall Street's earnings estimate by two cents per share at $0.17 per diluted share.
Cancellations and push-outs of orders along with price erosion in the semiconductor recession lowered STMicroelectronics' net revenues by 17.4% from $1.92 billion in the first quarter of 2001. Revenues were 15.5% lower than $1.88 billion in the second quarter of 2000.
"Based upon today's available information, we believe that the industry will bottom-out in the third quarter of 2001, and we expect that ST's revenues for that period will decline sequentially by approximately 10-to-15% from 2001 second quarter levels," said Pasquale Pistorio, president and chief executive officer of the European chip maker.
Pistorio cautioned that "unprecedented poor visibility of the near term demand" continues to plague the industry. The CEO said pricing pressure and lower plant utilization rates will most likely drive down ST's gross margin to a range of 32-to-36% compared to 38% in the just-ended second quarter. During the height of the good times in Q2 2000, ST had a gross margin of 46.6%.
"In the fourth quarter of 2001, we expect our revenues and gross margin to improve on a sequential basis," Pistorio said. "This projection assumes inventory work-downs in several of our key end markets, but continued pricing pressures affecting certain product families due to industry overcapacity. Additionally, we could see improved operating profitability resulting from cost reduction programs implemented earlier in the year."
STMicroelectronics said it recorded a pre-tax restructuring charge of $311.3 million, primarily for cost-cuts related to certain 6-inch wafer fabs and to cover the closure of the company's Ottawa manufacturing facilities (see May 31 story). |
