STMicroelectronics Q3 Loss Narrows, But Results Miss View

(RTTNews) - European semiconductor company STMicroelectronics NV (STM) on Tuesday reported a loss for the third quarter that narrowed from last year, as lower expenses and fewer charges helped offset a decline in revenue. However, results for the quarter missed analysts' expectations. The company's shares declined almost 3 percent in extended trades.

The Geneva, Switzerland-based company's net loss for the third quarter narrowed to $142 million or $0.16 per share from $478 million or $0.54 per share in the year-ago quarter.

The latest quarter's results include a charge of $120 million, mostly non-cash, in connection with the company's annual third-quarter impairment review and already announced restructuring initiatives. The prior-year quarter's results include a charge of $713 million.

On an adjusted basis, net loss for the latest quarter was $23 million or $0.03 per share, compared to net loss of $29 million or $0.03 per share in the prior-year quarter. On average, analyst polled by Thomson Reuters expected the company to report earnings of $0.05 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the third quarter declined 7 percent to $2.01 billion from $2.17 billion in the same period last year. Analysts had a consensus revenue estimate of $2.04 billion for the quarter.

Excluding the Wireless product line, revenues for the quarter increased 4 percent from last year, driven by Imaging, Microcontrollers, MEMS and Automotive.

Carlo Bozotti, President and CEO of STMicroelectronics said, "On one hand, we saw overall year-over-year revenue improvement of 3.9 percent across our business outside of the Wireless product line. We believe this exceeds the year-over-year revenue performance of our served market."

Bozotti added, "On the other hand, this growth was milder than expected due to a muted order pattern during the quarter driven by softness in high-end smartphones in Asia and the mass market in Asia, including the cable set-top box market in certain countries."

Gross margin for the quarter declined to 32.4 percent from 34.8 percent in the same period last year. Total operating expenses declined to $718 million from $1.55 billion in the year-ago period, reflecting lower selling, general and administrative expenses as well as R&D expenses in addition to fewer charges.

The company's Sense & Power and Automotive Products or SPA revenues rose 3 percent from last year, led by growth in Automotive or APG sales. Meanwhile, Embedded Processing Solutions segment revenues declined 18 percent from last year, due to a significant decrease in wireless or WPS sales and to a lesser extent, overall Digital Convergence or DCG sales.

Looking ahead, STMicroelectronics forecasts fourth-quarter revenues to be about flat on a sequential basis, plus or minus 3.5 percentage points. The company projects gross margin for the quarter to be about 33.0 percent, plus or minus 2.0 percentage points. Analysts expect the company to report revenues of $2.09 billion for the quarter.

In early August, STMicroelectronics and Ericsson (ERIC) announced the closing of the transaction for the split up of ST-Ericsson joint venture. Effective August 2, 2013, Ericsson has taken on the design, development and sales of the LTE multimode thin modem solutions, including 2G, 3G and 4G interoperability. In total, around 1,800 employees and contractors have joined Ericsson.

The company said it has submitted a resolution to distribute a cash dividend of $0.10 per outstanding common share for each of the fourth quarter of 2013 as well as the first quarter of 2014, for adoption by shareholders at the forthcoming extraordinary general meeting to be held in Schiphol, The Netherlands, on December 2, 2013.

STM closed Tuesday's regular trading at $8.69, down $0.11 or 1.25 percent on a volume of 3.67 million shares. In after-hours, the stock further declined $0.25 or 2.88 percent to $8.44.