* 50/50 joint venture between Ericsson and STMicroelectronics
started operations on February 2nd 2009, creating a new
wireless-semiconductor industry leader
* Net sales $391 million
* Operating loss $98 million
* $230 million of annualized savings expected from a new program of
resources and operations re-alignment to reflect outcome of the
integration as well as current unfavorable business environment
* Continuous focus on innovation and strengthening of strategic
partnerships with customers since the launch of the company in
February 2009
Geneva - Switzerland -April 29, 2009 - ST-Ericsson, a joint venture
of STMicroelectronics (NYSE: STM) and Ericsson (NASDAQ:ERIC),
reported financial results for its first two months of operation from
February 2nd 2009.
President and CEO Alain Dutheil commented: "Our sales development in
the quarter reflects the broad-based economic downturn that has led
to weaker consumer demand for handsets and put pressure on the
overall wireless semiconductor industry.
Even in such a challenging climate, during the first quarter of 2009
we confirmed our number two position in the market, we renewed our
focus on innovation and we strengthened our partnership with key
customers.
We were the first to consolidate in our industry, creating a new
global leader in wireless platforms and semiconductors, and we are
currently executing on an alignment of our operations that will allow
us to shape the long term success of the company, while creating a
sustainable cost structure for the short and medium term.
A more efficient and integrated product strategy, based on the future
convergence of our 3G roadmap and on our continued commitment on
2G/EDGE and connectivity, as well as a strong focus on next
generation access technologies, will help us achieve our short and
long term objectives and continue to offer our customers a complete
and innovative portfolio of solutions."
FINANCIAL HIGHLIGHTS
First Quarter 2009 actual (Feb 2 - March 28 2009)
+--------------------------------------------+
| $ millions | Feb - March 2009 |
|-------------------------+------------------|
| Income Statement | |
|-------------------------+------------------|
| NET SALES | 391 |
|-------------------------+------------------|
| OPERATING INCOME/(LOSS) | (98) [2] |
|-------------------------+------------------|
| NET INCOME/(LOSS) | (89) |
+--------------------------------------------+
Net sales in the two months of operations reflected the economic
downturn that led to weaker consumer demand especially in Europe,
mainly in the feature phones segment, reinforced by overall inventory
reduction in the handset supply chain.
The operating loss of $98 million was a consequence both of the level
of sales and of price pressure on margins, partially offset by
already planned reductions in operating expenses related to the cost
synergies program previously announced by ST-NXP Wireless in November
2008. Net cash [3] was $358 million at the end of Q109.
Alignment of operations and resources
A restructuring plan is being launched for immediate execution and is
due to be completed by the second quarter of 2010. This plan is
incremental to the $250 million cost synergies program announced by
ST-NXP Wireless in November 2008.
Annualized savings of the new restructuring plan are expected to be
approximately $230 million upon completion. Restructuring costs are
estimated in the range of $70 - 90 million, of which the majority is
expected to be recorded during the second quarter of 2009.
The main assumptions of the restructuring plan are: a re-alignment of
product roadmaps to create a more agile and cost efficient R&D
organization; and a reduction in workforce of 1,200 worldwide to
reflect further integration activities following the merger, lower
sales volumes and limited visibility on the timing of market
recovery.
Market evolution"In view of the continued uncertainty of the global economy and in
accordance with published industry forecasts, we see a continued
challenging 2009 for our industry" said Alain Dutheil. "However, we
believe that the destocking phase is substantially over, even if we
have yet to see signs of a broad-based pick-up of demand in our
industry".
Q1 2009 Highlights- Products, Technology and Wins
In February 2009 the company announced its cooperation with Nokia to
provide a Next-Generation Smartphone Platform for Symbian Foundation,
with a reference platform based on ST-Ericsson's U8500 single chip.
Also in February the company announced its collaboration with ARM to
demonstrate the world's first Symmetric Multi Processing mobile
platform technology running on Symbian OS.
In March, the company launched fully integrated single-chip solutions
for feature-rich, low-cost handsets. ST-Ericsson's 4910 and 4908 EDGE
platforms combine the industry's highest level of integration and
cost-efficiency, with both digital and analog basebands, RF
transceiver and power management unit (PMU) in a single chip.
A next-generation mobile audio digital-to-analog converter (DAC) for
the mobile music market was also launched. ST-Ericsson's STw5211
further extends the company's wide portfolio of audio solutions with
enhanced performance.
PRO-FORMA INFORMATION[4]
+-----------------------------------------------------------------------+
| | Q1 09 | Q4 08 | Q3 08 | Q2 08 | Q1 08 |
| |Pro-forma|Pro-forma|Pro-forma|Pro-forma|Pro-forma|
|---------------------+---------+---------+---------+---------+---------|
| NET SALES | 562 | 746 | 1,003 | 966 | 862 |
|---------------------+---------+---------+---------+---------+---------|
| OPERATING INCOME/ | (179) | (127) | (59) | (94) | (121) |
| (LOSS) | | | | | |
+-----------------------------------------------------------------------+
-ENDS-
About ST-Ericsson
ST-Ericsson is a world leader in developing and delivering a complete
portfolio of innovative mobile platforms and cutting-edge wireless
semiconductor solutions across the broad spectrum of mobile
technologies. The company is a leading supplier to the top handset
manufacturers and ST-Ericsson's products and technologies enable more
than half of all phones in use today. The global company of 8,000
people generated pro-forma sales of about USD 3.6 billion in 2008.
ST-Ericsson was established as a 50/50 joint venture by
STMicroelectronics (NYSE: STM) and Ericsson (NASDAQ: ERIC) in
February 2009, with headquarters in Geneva, Switzerland. More
information about ST-Ericsson is available at www.stericsson.com.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Global Communications & Media Investor Relations
Relations
Claudia Levo, Switzerland, Fabrizio Rossini, Switzerland,Geneva
Geneva
Phone: +41 22 930 2750 Phone: +41 22 929 6973
Email: Email: fabrizio.rossini@stericsson.com
media.relations@stericsson.com
Kristina Embring Klang,
Sweden, Lund
Phone : +46 10 7135058
Email:
media.relations@stericsson.com
Ericsson
Susanne Andersson , Sweden, Stockholm
Phone: +46 10 719 4631
Gary Pinkham, Sweden, Stockholm
Phone: +46 10 719 0858
Andreas Hedemyr, Sweden, Stockholm
Phone: +46 10 404 3748
E-mail: investor.relations@ericsson.com
STMicroelectronics
Tait Sorensen, US, Phoenix AZ
Phone: +1 602-485-2064
Celine Berthier, Switzerland, Geneva
Phone: +41 22 929 5812
Email: investors@st.com
###
This press release contains forward-looking statements that involve
inherent risks and uncertainties. We have identified certain
important factors that may cause actual results to differ materially
from those contained in such forward-looking statements. For a
detailed description of risk factors see STMicroelectronics' (NYSE:
STM) and Ericsson's (NASDAQ: ERIC) filings with the US Securities
and Exchange Commission, particularly each company's latest published
Annual Report on Form 20-F.
[1] The reported financial results are based on US GAAP.
[2] Operating Loss reported after :
amortization of acquisition-related intangibles & software
capitalization $(11) million
restructuring
charges $
0 million
Total
$(11) million
[3] Net cash is defined as cash and cash equivalents, marketable
securities, short term deposits less total debt.
[4] The unaudited pro-forma results are presented as if the
ST-Ericsson joint venture had been created on January 1, 2008 and
incorporates the results of ST-Ericsson and predecessors (ST-NXP
Wireless and Ericsson Mobile Platforms) beginning on that date (while
effectively it started operations on February 2nd, 2009). Such
results are presented for information purposes only and are not
indicative of the results of operations that would have been achieved
had the acquisition taken place as of January 1, 2008. Pro-forma
results do not include inventory step-up and write-off of IP R&D for
a total value of $166M in Q3 and $39M in Q4.
ST-Ericsson reports financial results[1] for its first two months of operation
| Source: Ericsson, Telefonab. L M
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