STMicroelectronics Reports 2012 Second Quarter and First Half Financial Results

GENEVA -- (Marketwire) -- Jul 23, 2012 -- STMicroelectronics (NYSE: STM)

  • Second quarter net revenues up 6.5% sequentially to $2.15 billion
  • Second quarter gross margin up 470 basis points sequentially to 34.3%
  • ST net financial position $1.15 billion at June 30th*

(*) ST net financial position is a non-U.S. GAAP measure. Please refer to Attachment A for additional information explaining why the Company believes this measure is important and for reconciliation to U.S. GAAP.

STMicroelectronics (NYSE: STM) reported financial results for the second quarter and first half ended June 30, 2012.

On a sequential basis, second quarter net revenues increased 6.5% to $2.15 billion, gross margin improved to 34.3% and net loss attributable to parent company decreased to $75 million.

President and CEO Carlo Bozotti commented, "Our second quarter financial results improved on a sequential basis despite a macro-driven change in customer sentiment in June. Thanks to broad-based growth and the continued expansion of our product portfolio into new applications, our second quarter net revenues and gross margin results were in line with our business outlook. Further, we saw a significant improvement in our net results, although there remains substantial progress to be made.

"A critical component of our capability to improve our financial results is ST-Ericsson. During the quarter, the joint-venture took its first steps in executing their new strategic plan and showed initial progress on all profit and loss metrics. In parallel, we are committed to ensure that the VLSI block, our digital businesses plus ST-Ericsson, becomes self-sustainable and this is one of our top priorities.

"New product introductions into the fastest growing applications, from energy management to healthcare and wellness, from trust and data security to smart consumer devices, are delivering results. During the quarter we ramped production of a pressure sensor and an iNEMO module containing an integrated gyroscope and accelerometer for Samsung's latest and most advanced smartphone, we shipped in volume AMOLED drivers for smartphones, we won key design-wins in smart power for automotive and for several STM32 32bit microcontrollers in new fitness applications. We also took an important step towards creating a unified processing platform thanks to the recently completed transfer of the ST-Ericsson application processor development team. This will enable us to leverage our broad system knowledge and customer relationships on a much larger addressable market."

Summary Financial Highlights

U.S. GAAP                                                                   
(In Million US$)                                   Q2 2012  Q1 2012  Q2 2011
                                                  -------- -------- --------
Net Revenues (a)                                    2,148    2,017    2,567 
Gross Margin                                        34.3%    29.6%    38.1% 
Operating Income (Loss), as reported                (207)    (352)     83   
Net Income (Loss) attributable to parent company    (75)     (176)     420  

(a) Net revenues include sales recorded by ST-Ericsson as consolidated by ST

                                                                            
Non-U.S. GAAP*                                                              
Before impairment, restructuring and one-time                               
 items                                                                      
(In Million US$)                                 Q2 2012   Q1 2012   Q2 2011
                                                --------- --------- --------
Operating Income (Loss)                           (151)     (280)      114  
Operating Margin                                  (7.0%)   (13.9%)    4.4%  
Operating Margin - attributable to ST             (1.3%)    (6.5%)    9.1%  
                                                                            

Second Quarter Review

ST's second quarter net revenues increased 6.5% on a sequential basis, with ST's wholly-owned businesses posting a sequential increase of 4.4% while the Wireless product segment grew by about 19%. All regions grew sequentially with Greater China & South Asia up about 9%, the Americas by about 5%, and EMEA and Japan & Korea each by approximately 4%.

Second quarter gross margin increased 470 basis points sequentially to 34.3%. Excluding a one-time charge following an arbitration award in the first quarter of 2012, gross margin increased 210 basis points sequentially mainly due to a higher level of saturation, favorable product mix and some favorable currency effects which started to occur in the later portion of the quarter. Unsaturation charges in the second quarter were $16 million compared to $71 million in the first quarter.

Combined SG&A and R&D expenses were $909 million compared to $943 million in the prior quarter due to efforts to continuously reduce expenses on a quarter by quarter basis principally driven by ST-Ericsson's ongoing cost-realignment initiatives. Combined operating expenses, as a percentage of sales, improved to 42.3% in the 2012 second quarter compared to 46.8% in the prior quarter.

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