STMicroelectronics Posts First-Quarter Profit After Chip Industry Rebounds
Stock Chart for STMicroelectronics NV (STM)
STMicroelectronics NV, Europe’s largest semiconductor maker, posted a first-quarter profit as demand for chips recovered after the economic slump.
Net income was $57 million, compared with a net loss of $541 million a year earlier, the Geneva-based company said in a statement today after the close of trading in New York. Sales advanced 40 percent to $2.33 billion. Net income had been predicted at $13.3 million on sales of $2.43 billion, the average estimates of analysts surveyed by Bloomberg.
“Our first quarter revenues, well in-line with our expectations, reflected the significant rebound from the economic crisis and solid demand for our products,” Chief Executive Officer Carlo Bozotti said in the release.
Sales of chips, used in such products as mobile phones, set-top boxes and washing machines, have picked up after the economic recession. In January, Bozotti predicted that the market STMicroelectronics serves would rise 10 percent to 12 percent this year. On April 13, Intel, the world’s biggest chipmaker, forecast second-quarter sales that topped analysts’ predictions, after posting record sales in the first three months.
“In addition to the positive effect from the stronger U.S. dollar, prices are rising thanks to a combination of very strong demand and saturated production capacity in the reference market,” brokerage Intermonte Sim SpA said in a note before the results.
STMicroelectronics is benefitting from an increase in the value of the U.S. dollar as most of its revenue is in this currency. The dollar has gained 7 percent against the euro this year.
In February, STMicroelectronics, Intel Corp. and Francisco Partners agreed to sell flash-chip maker Numonyx BV to Micron Technology Inc., the biggest U.S. producer of computer memory. STMicroelectronics said at the time it expected to receive about 66.6 million Micron shares in the deal. The Geneva-based company predicted it would make a gain of about $280 million on the deal after accounting for debt and other payments.
Infineon Technologies AG, Europe’s second-largest chipmaker, said last week it will raise its full-year forecast as second-quarter sales and earnings were better than anticipated.
The Semiconductor Industry Association said April 5 it’s “cautiously optimistic” for growth beyond its November forecast, when it predicted a 10.2 percent gain in global chip sales this year. Research firm Gartner Inc. predicted Feb. 24 that worldwide semiconductor revenue will advance about 20 percent to $276 billion in 2010.
To contact the reporters on this story: Chiara Remondini in Milan at firstname.lastname@example.org
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