* Net sales $666 million; 18.5% sequential increase
* Adjusted operating loss[1] $165 million
* Strong momentum in China with leading customers
* New organization announced to accelerate execution of new product
strategy
Geneva, Switzerland, July 23, 2009 - ST-Ericsson, a joint venture of
STMicroelectronics (NYSE:STM) and Ericsson (NASDAQ:ERIC), reported
financial results for the second quarter 2009.
President and CEO, Alain Dutheil, commented: "During the second
quarter our sales performed above normal seasonal patterns. This was
due to the destocking phase in the channels being over, to the
pick-up of demand in China, and to our steady execution on our
commitments towards our customers.
We have kept a strong focus on our restructuring and realignment
plans. The $250 million cost synergies program, defined by ST-NXP
Wireless in the third quarter 2008, is expected to be completed by
year-end according to schedule. The new restructuring plan of $230
million cost synergies, announced at the end of April, has been
initiated and is expected to be completed by the second quarter 2010.
Today we have also announced our new organization, aligned to our
product strategy, to further strengthen our technological leadership
and complete the integration."
Financial highlights (unaudited)
+-------------------------------------------------------------------+
| | Q2 2009 | Q1 2009 | Feb-March | Q2 |
| | | PRO- | 2009[2] | 2008 |
| | | FORMA | | PRO- |
| $ millions | | | | FORMA |
|---------------------------+---------+---------+-----------+-------|
| Income Statement | | | | |
|---------------------------+---------+---------+-----------+-------|
| NET SALES | 666 | 562 | 391 | 966 |
|---------------------------+---------+---------+-----------+-------|
| OPERATING INCOME/(LOSS) | | | | |
| ADJUSTED for: | (165) | (149) | (78) | (69) |
|---------------------------+---------+---------+-----------+-------|
| - amortization of | | | | |
| acquisition-related | | | | |
| intangibles | (24) | (30) | (20) | (25) |
|---------------------------+---------+---------+-----------+-------|
| - restructuring charges | (35) | 0 | 0 | 0 |
|---------------------------+---------+---------+-----------+-------|
| OPERATING INCOME / (LOSS) | | | | |
| as reported | (224) | (179) | (98) | (94) |
|---------------------------+---------+---------+-----------+-------|
| NET INCOME / (LOSS) | (213) | NA | (89) | NA |
+-------------------------------------------------------------------+
Financial results based on US GAAP
Net sales in the second quarter were higher than normal seasonal
patterns and showed a progress of 18.5% compared to first quarter
2009 pro-forma sales. This was mainly due to the higher demand in
China - driven by TD-SCDMA- and in the rest of Asia-Pacific and to
the alignment of inventory to demand levels across the handset supply
chain.
The $165 million operating loss, excluding amortization of
acquisition-related intangibles and restructuring charges, compares
to a $149 million operating loss in the first quarter 2009 pro-forma
and it includes approximately $20 million of non-recurring items
linked to the start-up of the company.
Inventory declined sequentially by $109 million reaching $325 million
at the end of the second quarter 2009, reflecting a tight control of
the supply chain.
Net cash[3] was $326 million at the end of second quarter 2009.
Update on restructuring plans
The $250 million cost synergies program defined by ST-NXP Wireless in
the third quarter 2008 is in line with plans. The program envisaged a
workforce reduction of 500 worldwide.
The $230 million restructuring plan announced on April 29 has been
initiated. The associated restructuring charges were $35 million for
the second quarter 2009. The plan envisages a reduction in workforce
of 1,200 worldwide, upon completion of negotiations and consultations
with Work Councils and employee representatives that have already
started in all affected sites and organizations.
Market evolution
"While more normal seasonal market trends are likely to be confirmed
in the next quarter, primarily driven by Asia, including China, the
business environment remains uncertain in the medium term," said
Alain Dutheil. "We will continue to drive the execution of our
realignment and restructuring plans with a strong focus on providing
our customers with solutions spanning across all existing and
next-generation access technologies."
Q2 2009 highlights - products, technology and wins
In May, ST-Ericsson announced a strategic partnership with China
Mobile to drive development of both high-end and low-cost handsets,
based on 3G standard TD-SCDMA. Within this agreement, ST-Ericsson
will also support four of its customers to commercialize their mobile
phones during 2009-2010.
In June, the company strengthened its partnership with Samsung by
providing an innovative platform for its first high-end TD-SCDMA/EDGE
device for China's mobile broadband market.
The company also announced mass production of its highly integrated
RF transceiver solution to reduce cost and system footprint in 3G
handsets. ST-Ericsson's Aero4228 solution eliminates the need for
expensive external filter components typically required to complete
today's mobile handset designs.
Footnotes
[1] The adjusted operating loss is defined as the operating loss
reported before amortization of acquisition-related intangibles and
restructuring charges and is used by management to help enhance the
understanding of ongoing operations and to communicate the impact of
the items on the operating loss as reported.
[2] First quarter 2009 actual results, which include only two months
of operations, February and March, as the ST-Ericsson joint-venture
started operations on February 2, 2009.
[3] Net cash is defined as cash and cash equivalents, marketable
securities, short term deposits less total debt
Notes to editors
ST-Ericsson invites media to a conference call at 9.30 A.M. CET and
analysts and investors to a conference call at 2:00 P.M. CET.
Call-in numbers and live webcasts of the conference calls as well as
supporting slides will be available at
http://www.stericsson.com/investors/investors.jsp.
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 company generated
pro-forma sales of about $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, Geneva, Fabrizio Rossini, Geneva, Switzerland
Switzerland
Jana Mancova, Geneva,
Switzerland
Phone: +41 22 930 2733 Phone: +41 22 929 6973
Email: Email: investor.relations@stericsson.com
media.relations@stericsson.com
Kristina Embring Klang, Lund,
Sweden
Phone: +46 10 713 5058
Email:
media.relations@stericsson.com
Ericsson Investor Relations STMicroelectronics
Investor Relations
Gary Pinkham, Stockholm, Sweden Tait Sorensen, Phoenix AZ,
US
Phone: +46 10 719 0858 Phone: +1 602 485 2064
Susanne Andersson, Stockholm, Celine Berthier, Geneva,
Sweden Switzerland
Phone: +46 10 719 4631 Phone: +41 22 929 5812
Andreas Hedemyr, Stockholm, Sweden Email: investors@st.com
Phone: +46 10 404 3748
E-mail: investor.relations@ericsson.com
###
The ST-Ericsson results reported in this press release do not reflect
in their entirety the results of the Wireless Segment of
STMicroelectronics, which include other activities that are not part
of ST-Ericsson. STMicroelectronics will disclose its results for the
second quarter on July 28, 2009.
###
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.
