| STMicro Swings to Profit After Strategy Shift | By Sam Schechner and Inti Landauro
PARIS-- STMicroelectronics NV swung to its first quarterly profit in more than two years as Europe's largest semiconductor maker continues to wind down its communication chip business to focus on making chips for cars and other applications.
STMicro reported a net profit of $38 million in the second quarter, or 4 cents a share, compared with a net loss of $152 million, or 17 cents a share, in the second quarter a year earlier. Excluding the impact of impairments, restructuring and one-time items, its adjusted profit rose to $102 million from a net loss of $53 million.
The company expects net revenue to rise 3% in the third quarter from the $1.86 billion it posted in the second quarter, which was 8.9% below the second quarter last year. Net revenue at the company, which is partly owned by the French and Italian governments, dropped as the company continued to see falling sales from its soon-to-be discontinued communication-chip unit, formerly a joint venture with Ericsson.
STMicro said its gross profit margin rose to 34% in the second quarter up from 32.8% in the same period in 2013. The company expects its margin to rise to 34.4% in the third quarter.
The company's growth was boosted by demand in Europe, Middle East and Africa, greater China and South Asia, while sales in the Americas and Japan and Korea declined.
STMicro, which makes microchips and sensors for mobile devices and industrial-applications devices, has been slowly clawing its way back to profit after nearly three years of losses caused by the collapse of its business making chips for feature-phone makers like Nokia and BlackBerry.
Investors have generally cheered the company's shift toward businesses such as electronic sensors for cars and digital devices. The company also aims to license some of its chip-making technology. In the second quarter it sealed a deal with Samsung Electronics to use a new STMicro chip technology in its own foundries.
STMicro shares ended up 0.2% on Tuesday in New York at $9.35, though were down 6.1% from a three-year high of $9.96 at the end of May. |
