Industry
STMicroelectronics Reports 2005 Third Quarter and Nine Month Revenues and Earnings
Auteur : prnewswire.com/
Du : 01/11/2005
STMicroelectronics (NYSE: STM)
reported financial results for the third quarter and nine months ended October
1, 2005.
Revenues, Gross Profit, and Margin Review
Net revenues for the third quarter were $2,247 million, up 3.9%
sequentially from the $2,162 million reported in the prior quarter, and 0.7%
above the $2,231 million reported in last year's third quarter. Sequential
sales growth was primarily driven by wireless and computer peripheral
applications, both of which also experienced strong double-digit, year-over-
year sales growth.
Gross profit increased 7.3% to $766 million from $714 million in the
second quarter of 2005. Gross margin was 34.1% in the third quarter compared
to 33.0% in the prior quarter. Enhanced product mix and manufacturing
performance drove the improvements in gross profit and gross margin, more than
offsetting continuing price pressure, especially in memory and standard
products.
Operating Expenses
Research and development expenses in the third quarter were $401 million
compared to $423 million in the prior quarter. Selling, general, and
administrative expenses were $248 million for the 2005 third quarter, down
from $255 million in the prior quarter. Combined SG&A and R&D expenses in the
third quarter were 28.9% of net revenues, improving from 31.4% in the second
quarter. The decrease in operating expenses was largely attributable to
specific cost-control actions coupled with seasonal factors.
Operating Income, Net Income, and Earnings per Share
For the 2005 third quarter, the Company reported operating income of $102
million and net income of $89 million, or $0.10 per share. In the prior
quarter the Company reported operating income of $12 million and net income of
$26 million, or $0.03 per share.
The Company posted $12 million of impairment, restructuring charges, and
other related closure costs during the 2005 third quarter. In the prior
quarter, restructuring related expenses were $22 million.
In the third quarter, the effective average exchange rate for the Company
was approximately $1.30 to euro 1, similar to second quarter levels.
Cash Flow and Balance Sheet Highlights
Net cash from operating activities in the third quarter was $475 million
compared to $409 million in the prior quarter. Capital expenditures were $284
million in the 2005 third quarter, compared to $363 million in the prior
quarter. Net operating cash flow* for the third quarter increased to $173
million, compared to $23 million in the second quarter.
At October 1, 2005, ST had cash, cash equivalents, and marketable
securities of $1.77 billion. Total debt was $1.84 billion; net financial debt
was reduced from $276 million at the end of the prior quarter to $71 million
at October l, 2005; shareholders' equity was $8.4 billion.
(*) Net operating cash flow is defined as net cash from operating
activities ($475 million in the third quarter of 2005) minus net cash
used in investing activities ($302 million in the third quarter of
2005) excluding payments for purchase of and proceeds from the sale of
marketable securities ($0 in the third quarter of 2005).
President and CEO Remarks
Carlo Bozotti, President and Chief Executive Officer commented, "ST's
third quarter financial performance, which was well in line with our outlook,
showed sequential improvements in revenues, gross margin, and earnings per
share. Additionally, we were pleased by the significant increase in net
operating cash flow resulting from our capital management.
The quarter was also a period of steady progress across all of our key
objectives:
-- ST had a good level of sequential sales growth in several key markets,
led by wireless. The effort to expand the key customer base also
continued to gain momentum. In addition, reflecting the importance of
China and ST's leading presence there, we created a new regional
organization focused exclusively on this key market;
-- On the product front, we continue to gain traction in the acceptance of
our new products. From wireless connectivity ASSP solutions to a new
wave of high-definition digital consumer offerings, we are compiling
important design wins which will help drive sales and margin
improvement in 2006 and beyond;
-- Finally, our manufacturing cost-reduction initiatives are moving
forward steadily and contributed to the improved results in the
quarter.
In summary, we are on track with our roadmap to improve overall corporate
performance. Our efforts are starting to become visible with improvements in
most of our key metrics to date. Nonetheless, there is more work to be done."
Additional Third Quarter 2005 Financial and Operating Data
The following tables and commentary provide a breakdown of revenues and
operating income (loss) by product group and segment revenues by targeted
market.
reported financial results for the third quarter and nine months ended October
1, 2005.
Revenues, Gross Profit, and Margin Review
Net revenues for the third quarter were $2,247 million, up 3.9%
sequentially from the $2,162 million reported in the prior quarter, and 0.7%
above the $2,231 million reported in last year's third quarter. Sequential
sales growth was primarily driven by wireless and computer peripheral
applications, both of which also experienced strong double-digit, year-over-
year sales growth.
Gross profit increased 7.3% to $766 million from $714 million in the
second quarter of 2005. Gross margin was 34.1% in the third quarter compared
to 33.0% in the prior quarter. Enhanced product mix and manufacturing
performance drove the improvements in gross profit and gross margin, more than
offsetting continuing price pressure, especially in memory and standard
products.
Operating Expenses
Research and development expenses in the third quarter were $401 million
compared to $423 million in the prior quarter. Selling, general, and
administrative expenses were $248 million for the 2005 third quarter, down
from $255 million in the prior quarter. Combined SG&A and R&D expenses in the
third quarter were 28.9% of net revenues, improving from 31.4% in the second
quarter. The decrease in operating expenses was largely attributable to
specific cost-control actions coupled with seasonal factors.
Operating Income, Net Income, and Earnings per Share
For the 2005 third quarter, the Company reported operating income of $102
million and net income of $89 million, or $0.10 per share. In the prior
quarter the Company reported operating income of $12 million and net income of
$26 million, or $0.03 per share.
The Company posted $12 million of impairment, restructuring charges, and
other related closure costs during the 2005 third quarter. In the prior
quarter, restructuring related expenses were $22 million.
In the third quarter, the effective average exchange rate for the Company
was approximately $1.30 to euro 1, similar to second quarter levels.
Cash Flow and Balance Sheet Highlights
Net cash from operating activities in the third quarter was $475 million
compared to $409 million in the prior quarter. Capital expenditures were $284
million in the 2005 third quarter, compared to $363 million in the prior
quarter. Net operating cash flow* for the third quarter increased to $173
million, compared to $23 million in the second quarter.
At October 1, 2005, ST had cash, cash equivalents, and marketable
securities of $1.77 billion. Total debt was $1.84 billion; net financial debt
was reduced from $276 million at the end of the prior quarter to $71 million
at October l, 2005; shareholders' equity was $8.4 billion.
(*) Net operating cash flow is defined as net cash from operating
activities ($475 million in the third quarter of 2005) minus net cash
used in investing activities ($302 million in the third quarter of
2005) excluding payments for purchase of and proceeds from the sale of
marketable securities ($0 in the third quarter of 2005).
President and CEO Remarks
Carlo Bozotti, President and Chief Executive Officer commented, "ST's
third quarter financial performance, which was well in line with our outlook,
showed sequential improvements in revenues, gross margin, and earnings per
share. Additionally, we were pleased by the significant increase in net
operating cash flow resulting from our capital management.
The quarter was also a period of steady progress across all of our key
objectives:
-- ST had a good level of sequential sales growth in several key markets,
led by wireless. The effort to expand the key customer base also
continued to gain momentum. In addition, reflecting the importance of
China and ST's leading presence there, we created a new regional
organization focused exclusively on this key market;
-- On the product front, we continue to gain traction in the acceptance of
our new products. From wireless connectivity ASSP solutions to a new
wave of high-definition digital consumer offerings, we are compiling
important design wins which will help drive sales and margin
improvement in 2006 and beyond;
-- Finally, our manufacturing cost-reduction initiatives are moving
forward steadily and contributed to the improved results in the
quarter.
In summary, we are on track with our roadmap to improve overall corporate
performance. Our efforts are starting to become visible with improvements in
most of our key metrics to date. Nonetheless, there is more work to be done."
Additional Third Quarter 2005 Financial and Operating Data
The following tables and commentary provide a breakdown of revenues and
operating income (loss) by product group and segment revenues by targeted
market.