ST reports 2010 Q3 and nine month financial results

AMSTERDAM, THE NETHERLANDS: STMicroelectronics reported financial results for the third quarter and nine months ended September 25, 2010.

Third quarter net revenues increased 16.8 percent on a year-over-year basis, with all regions and all market segments, excluding Telecom, posting revenue growth. Year-over-year regional growth was led by Greater China-South Asia with sales growth of 29 percent, followed by the Americas with a 27 percent increase.

Sequential net revenues growth of 5 percent was led by Greater China-South Asia and Japan-Korea with 9 percent and 7 percent growth, respectively. By product segment, on a year-over year basis, IMS and ACCI grew revenues by 43 percent and 29 percent, respectively, while Wireless decreased by 23 percent. Sequentially, net revenues increased by 7 percent for IMS, and by 4 percent for both ACCI and Wireless.

President and CEO Carlo Bozotti commented: “Our third quarter financial performance reflected high demand for our products and the effective operating leverage of our model. ST reported both revenues and gross margin above the mid-point of our guidance range. These results underscore the quality of our product portfolio and validate our roadmap to enhance our return on invested capital.

“Our two largest product sectors, ACCI and IMS, both achieved record levels of sales in the quarter, with IMS surpassing one billion dollars in quarterly sales for the first time.

“At the operating profit level, results were also very good. ACCI operating margin increased to 11.7 percent, while IMS rose to 19.7 percent. These strong results are primarily due to the strengthening of our product portfolio and already
meet or exceed our operating margin goals for the end of 2010.

“ST-Ericsson continues to make progress in its ongoing portfolio transition and restructuring efforts and, as expected, reported sequential revenue growth of 4 percent and improvements of operating results.

“Thanks to ST’s strong improvement in operating results as well as accelerated net asset turns, the RONA and RONA attributable to ST reached 13 percent and 19 percent, respectively. We moved into our targeted ranges well in advance of our expectations even during this exceptional period of investment in wireless R&D.

“The R&D investments in our product portfolio, the work on improving our cost structure, and the marketing and sales initiatives, in combination with favorable market conditions, have enabled ST to deliver progressively stronger financial results throughout the first three quarters of 2010. In summary, ST met or exceeded all key performance targets in the third quarter.”

Third quarter review
ST’s net revenues for the third quarter of 2010 totaled $2,657 million and included sales recorded by ST-Ericsson as consolidated by ST. Net revenues increased 16.8 percent compared to the year-ago quarter and 5% sequentially.

On a year-over-year basis, all market segments, except Telecom, posted growth, with Consumer increasing by 36 percent, Automotive by 31 percent, Industrial & Other by 25 percent, and Computer by 18 percent. Telecom declined by 12 percent. Distribution increased 61 percent.

Sequentially, all market segments, except Industrial & Other, increased with Computer higher by 16 percent, Consumer by 6 percent, Automotive by 4 percent and Telecom by 3 percent. Industrial & Other decreased by 5 percent due to product mix, principally in smartcards. Distribution increased sequentially by 7 percent.