STMicroelectronics Posts Profit In Q4, Sees Sequential Drop In Q1 Revenue

(RTTNews) - Chip-maker STMicroelectronics (STM) Wednesday reported a profit for the fourth quarter, compared to a loss last year, despite a decline in revenues. Looking ahead, the firm sees sequential drop in first-quarter revenues, amid a weak market.

Net income attributable to parent company was $43 million or $0.05 per share, compared to a net loss of $36 million or $0.04 per share in the year-ago quarter.

Adjusted net income per share was $0.07, while it was a net loss of $0.01 per share last year.

Net revenues for the quarter dropped 9.2 percent to $1.829 billion from $2.015 billion in the previous year.

The decline in net revenues reflected the combination of the phase-out of legacy ST-Ericsson products as well as lower DCG sales, specifically set-top box, and AMS sales on product pruning and product generation transition.

Revenue from Sense & Power and Automotive Products or SP&A, which includes Analog & MEMS, Automotive as well as Industrial & Power Discrete businesses, fell to $1.164 billion from $1.233 billion.

Embedded Processing Solutions or EPS reported revenues of $660 million, down from last year's $776 million.

OEM revenues represented 68 percent of total revenues, compared to 73 percent last year, while Distribution revenues comprised 32 percent, in comparison with 27 percent last year.

Gross margin improved 90 basis points to 33.8 percent, reflecting the combined benefits of manufacturing efficiencies and favorable currency effects, offset in part by price pressure and unused capacity charges.

Looking ahead to the first quarter of 2015, revenues are expected to decrease about 5 percent on a sequential basis, plus or minus 3.5 percentage points. It will reflect no one-time licensing revenue compared to the fourth quarter, ST's high exposure to New-Year holidays in Asia as well as its shorter accounting calendar for the first quarter.

Gross margin in the first quarter is expected to be about 33.2 percent, plus or minus 2 percentage points and reflects still high unsaturation charges negatively impacting gross margin by about 120 basis points.

Carlo Bozotti, STMicroelectronics President and CEO, said, "Based upon our backlog, current plans of customers as well as the overall semiconductor market environment, we expect revenues in the first quarter of 2015 to decrease sequentially by about 5% at the mid-point, which is better than our normal seasonal evolution."

The stock gained 0.4 percent in early trade to 7.39 euros.