STMicro Reviews Digital Products With ‘Unsustainable’ Losses

STMicroelectronics NV, Europe’s largest chipmaker, plans to examine ways to stem losses in its digital products business and is exploring options for the unit, which has been a drag on sales growth.

The business, which accounts for about 12 percent of revenue, has been under review for the past two years as the company scaled down product lines and cut costs. Still, that hasn’t been enough to turn it around, Chief Executive Officer Carlo Bozotti said at an investor meeting in London Tuesday.

Its “losses are unsustainable,” Bozotti said. “This problem needs to be fixed and we will fix it. We are exploring options.”

STMicro shares rose as much as 5.2 percent in Paris, the biggest intraday increase in 6 months, and added 3.8 percent to 7.31 euros at 1:11 p.m.

Sales at the unit declined 27 percent to $207 million in the first quarter, the Geneva-based company said last month.

STMicro forecast improvements in total sales, driven by product lines for automobiles and its microcontroller and memory business, Bozotti also said. Revenue in the second half of the year will return to growth, compared with a year earlier, he said.

The company said last month second-quarter sales would advance 3.5 percent from the first quarter, to about $1.76 billion, compared with analysts’ estimates of $1.84 billion in revenue, sending the stock down the most in three years.

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