| STMicro Warns of Slack Sales Despite Return to Profit | By Ruth Bender And Sam Schechner
PARIS-- STMicroelectronics NV, Europe's largest semiconductor maker, expects weaker demand for its chips early this year as it swung into the black in the fourth quarter, with lower costs offsetting a decline in revenue.
STMicro said on Wednesday that it expects revenue to drop around 5% in the first quarter compared with the three months ended-December though that quarter-on-quarter decline that is less severe than it typically experiences in the period..
"Our main objective during 2015 is to continue to deliver year-over-year improvement, by returning to revenue growth and by continuing to improve our cost structure," Chief Executive Carlo Bozotti said in a statement.
STMicro, which is partly owned by the French and Italian governments, turned in fourth-quarter net profit of $43 million, equivalent to earnings of $0.05 cents a share, compared with a year-earlier loss of $36 million, or 4 cents a share, helped by lower operating expenses and restructuring costs.
Revenue fell 9.4% to $1.83 billion, in line with management's expectations.
Much of the decline came from the winding down of the company's money-losing wireless chip joint venture with Swedish telecommunications equipment maker Ericsson. But the company has also suffered from shrinking demand.
The company said that it expects its gross profit margin, the main indicator of its underlying profitability, to contract to around 33.2% in the current quarter from 33.8% in the fourth quarter. STMicro attributed the decline to costs associated with the underutilization of its factories.
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