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STMicro Posts $36 Million Fourth-Quarter Loss, Trails Estimates

STMicroelectronics NV (STM) reported fourth-quarter results that trailed analysts’ estimates as Europe’s largest semiconductor maker works to restructure plants and revamp its offerings.

The net loss narrowed to $36 million, or 4 cents a share, from $428 million, or 48 cents, a year earlier, the Geneva-based company said in a statement yesterday. The loss excluding impairment and restructuring charges totaled 1 cent a share. Analysts projected profit of 2 cents, the average of estimates compiled by Bloomberg.

STMicroelectronics has tallied more than $1.6 billion in losses over the past two years as it strove to restructure -- then ended -- its wireless venture with Ericsson AB. Chief Executive Officer Carlo Bozotti has since switched the chip designer’s focus to industries such as cars, game consoles and high-end smartphones.

Sales in the fourth quarter fell 6.8 percent to $2.01 billion, compared with analysts’ $2.02 billion estimate on average. Gross margin, or the percentage of sales left after deducting the cost of goods sold, was 32.9 percent during the quarter, matching analysts’ estimates.

The shares rose 0.3 percent to 5.65 euros at the close in Paris yesterday. They advanced 8.8 percent last year.

While rivals Qualcomm Inc. and Broadcom Corp. (BRCM) have shuttered factories and outsourced manufacturing to Asia, STMicroelectronics -- 27.5 percent owned by the French and Italian governments -- is betting it can prosper by keeping production in Europe, close to its design teams.

Last month, Moody’s Investors Service cut STMicroelectronics’s rating to Baa3, the lowest investment grade, citing concerns that the chipmaker’s profitability and cash-flow generation will improve slower than previously expected.

To contact the reporter on this story: Daniele Lepido in Milan at dlepido1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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