Infineon says losses will continue after posting sharply lower results in quarter
Company cuts $870 million from fiscal 2002 capital spending plans
Semiconductor Business News
(07/23/01 08:40 a.m. EST)
MUNICH -- Warning that losses will continue in the current fiscal quarter, Infineon Technologies AG today posted a 23% sequential drop in revenues to 1.28 euros ($1.1 billion) for the just-ended fiscal third quarter from 1.65 billion euros ($1.4 billion) in prior three-month period.
For the fiscal quarter, ended June 30, Infineon's net loss totaled 371 million euros ($323 million) vs. a net income of 23 million euros ($20 million). The Munich chip maker said it will post a net loss for its entire fiscal 2001 year, ending Sept. 30, due to weak demand and price erosion in memories, communications ICs and other products.
Last month, Infineon announced it was cutting capital spending by 16% and downgraded its outlook due to lower sales in DRAMs and other products in the semiconductor recession (see June 20 story). Today, the Munich chip supplier said it would lower capital spending plans by more than 1 billion euros ($870 million) in its 2002 fiscal year to about 1.5 billion euros ($1.3 billion), after scaling back investments to 2.3 billion euros ($2.0 billion) in the current 12-month period, which ends Sept. 30.
Infineon plans to use the proceeds of 1.5 billion euros ($1.3 billion) raised in a recent public offering to fund future capital expenditures and potential acquisitions (see July 3 story).
"Our public offering, in combination with our reduction of planned capital expenditures for the current and next fiscal year and the cost cutting measures we have implemented, will enable us to continue to fund cutting edge research and development as well as to implement our aggressive productivity roadmap, especially our leadership in 300-mm [wafer fab] technology," said Ulrich Schumacher, president and CEO of Infineon.
In memories, Infineon's revenues dropped 36% sequentially to 332 million euros ($289 million) in the fiscal quarter, ended June 30, from the prior three-month period. Memory sales were down 62% from a year ago. Infineon's DRAM-focused memory unit posted a loss before interest and taxes of 340 million euros ($296 million), including an inventory write-down of 81 million euros ($70 million).
Revenues in the just-ended quarter declined in all Infineon business sectors except for the company's Automotive and Industrial segment. In addition to the drop in memory revenues, sales in wireline, wireless and security/smart card chip products were sequentially lower in the fiscal third quarter than the prior period, said Infineon.
"Our balanced product portfolio did not help to ease the current weakness in the memory market any longer," Schumacher said. "This dynamic development and the magnitude of the current downturn, especially in communications, was not expected."
Infineon's Wireline Communications division has revenues of 188 million euros, a 17% drop from the prior quarter, which resulted in a loss before interest and taxes of 26 million euros ($23 million). The company's Wireless Communications group posted revenues of 176 million euros ($153 million), a drop of 36% from the fiscal second quarter this year, resulting in a loss of 176 million euros in the period ended June 30. |
