STMicroelectronics CEO Bozotti Sees Return to Profit in 2014
The company will grow faster than the market this year, Chief Executive Officer Carlo Bozotti said in an interview.
STMicro had a net loss of $36 million in the final three months of last year on costs to restructure plants and revamp its offerings, compared with $428 million in the year-earlier period, the Geneva-based company said in a statement yesterday. The loss excluding impairment and restructuring charges was 1 cent a share. Analysts projected profit on that basis of 2 cents, according to 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. Bozotti has since switched the chip designer’s focus to industries such as cars, game consoles and high-end smartphones.
The stock rose 0.1 percent to 5.66 euros at 11:02 a.m. in Paris.
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.
“In the first quarter, we expect overall revenues to decrease sequentially by about 9.5 percent at the midpoint,” Bozotti said in the statement. First-quarter revenue is reflecting a drop “from ST-Ericsson legacy products of more than half from the fourth quarter of 2013 level.”
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.
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