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ST inches closer to profitability

Posted: 02 May 2014     Print Version  Bookmark and Share

Keywords:STMicroelectronics  ST-Ericsson  MCU  memory 

STMicroelectronics NV has trimmed its losses in its Q1. This is due to the company's move to drastically cut costs by reducing R&D expenses and posting significantly lower impairment and restructuring charges. The European chipmaker posted a net loss of $24 million, compared with $171 million a year ago, while revenue, excluding legacy ST-Ericsson products, climbed 0.7 per cent YoY and decreased 6.4 per cent sequentially. Its revenue, including legacy ST-Ericsson products, declined YoY and sequentially by 9.2 per cent and 9.4 per cent, respectively, to $1.825 billion. ST's results were in line with expectations.

"During the first quarter, ST posted an operating profit before impairment and restructuring charges of $8 million, improving by $188 million year-over-year, driven by the exit from ST-Ericsson as well as operating expenses well in line with our financial model," said ST president and CEO, Carlo Bozotti.

Impairment and restructuring charges were significantly reduced in Q1 at $12 million compared to $101 million in the year-ago quarter, and R&D expenses fell 29.1 per cent, to $378 million.

Indeed, ST is slowly making its way back to profitability. ST sustained years of losses, stemming mostly from its wireless chip joint venture with Ericsson, as sales to key mobile device customers, including Nokia, Sony Ericsson and Blackberry, plummeted.

Looking ahead, ST expects to record a two per cent sequential increase in sales in 2Q14, with less of its revenue garnered from ST-Ericsson. In a conference call with analysts following the earnings release, Bozotti pointed to improvements in the macroeconomic environment, and said that the company's main area of focus moving forward will be the embedded processing solutions segment, which includes MCUs, digital consumer products, imaging products, memories, application processors and ASICs.

ST's general purpose microcontroller unit posted its fourth straight consecutive quarter of record revenue, Bozotti said. MCU, memory and secure MCU sales grew 15.6 per cent YoY, to $346 million.

During the quarter, ST signed a strategic agreement with a top-tier foundry for 28nm, fully depleted, silicon-on-insulator (FD SOI) technology.

"This agreement expands the ecosystem, assures the industry of high-volume production of ST's FD-SOI based IC solutions for faster, cooler and simpler devices and strengthens the business and financial prospects of the embedded processing solutions segment," said Jean-Marc Chery, who was promoted to COO from EVP and GM of ST's embedded processing solutions unit.

- Ismini Scouras
  EE Times

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