ST-Ericsson reports first quarter 2011 financial results
- Net sales $444 million
- Adjusted operating loss $149 million
- New high-speed modem sales nearly doubled sequentially
Geneva, Switzerland, April 26, 2011 - ST-Ericsson, a joint venture of STMicroelectronics (NYSE:STM) and Ericsson (NASDAQ:ERIC), reported financial results for the first fiscal quarter ending April 2, 2011.
"Revenue in the first quarter reflected normal seasonal trends but declined more than anticipated on a sequential basis due to a steeper drop in sales of our legacy products, which is not yet offset by sales of new products. Primarily due to these lower sales, our adjusted operating loss increased sequentially, said Gilles Delfassy, ST-Ericsson president and CEO.
"However, revenue from new products as a percentage of the total revenue grew again this quarter driven, for example, by sales of our high-speed Thor(TM) 21 megabits per second (Mbps) thin modems, which nearly doubled sequentially. We've also made further inroads with customers on our NovaThor(TM) family of products including the U8500 platform, which is on track.
"In the midst of these financial results, our main focus remains on improving efficiency and securing the successful execution and delivery of our new products to customers, which will drive the long term success of the company. And I am pleased to say that seven of the top nine device manufacturers by revenue are actively engaged with us here.
"We continue to believe in the direction we've set - to be a formidable leader in the smartphone and tablet markets. The traction we have with customers helps confirm these beliefs. We aim to serve these customers well and complete the transition to our new product portfolio as quickly as possible."
2011 First quarter financial summary (unaudited)
|$ million||Q1 2011||Q4 2010||Q1 2010|
|OPERATING INCOME/(LOSS) ADJUSTED for:||(149)||(119)||(114)|
|- amortization of acquisition-related intangibles||(25)||(28)||(24)|
|- restructuring charges||(4)||(24)||(27)|
|OPERATING INCOME / (LOSS) as reported||(178)||(171)||(164)|
|NET INCOME / (LOSS)||(178)||(177)||(154)|
|$ million||Q1 2011||Q4 2010||Q1 2010|
|Net Financial Position|
|Cash, cash equivalents & short-term deposits||39||68||120|
|Parents' short-term credit facilities||(234)||(150)||0|
|Net Financial Position||(195)||(82)||120|
Additional financial information
The net financial position at the end of the first quarter was negative $195 million. The sequential decrease was mainly due to the operating loss. During the first quarter the company sold trade receivables without recourse, of which $148 million were outstanding at the end of the quarter, representing a sequential decrease of $18 million.
Inventory increased by $46 million, reaching $321 million at the end of the first quarter, mainly due to the lower than expected sales during the quarter.
For the second quarter 2011, ST-Ericsson expects net sales to decline sequentially, primarily due to the ongoing decline in legacy products. The impact of the Japan earthquake has been manageable to date; however, the company will continue to monitor the supply chain situation.
Highlights - products, technology and wins announced in first quarter 2011
Financial results appendix (unaudited)
2010 financial results by quarter
|$ million||Q1 2010||Q2 2010||Q3 2010||Q4 2010|
|OPERATING INCOME/(LOSS) ADJUSTED for:||(114)||(118)||(85)||(119)|
|- amortization of acquisition-related intangibles||(24)||(25)||(25)||(28)|
|- restructuring charges||(27)||(5)||(19)||(24)|
|OPERATING INCOME / (LOSS) as reported||(164)||(148)||(129)||(171)|
|NET INCOME / (LOSS)||(154)||(139)||(121)||(177)|
 The adjusted operating income/(loss) is defined as the operating income/(loss) reported before amortization of acquisition-related intangibles and restructuring charges and is used by management to help enhance the understanding of ongoing operations and to communicate the impact of the items on the operating loss as reported.
 Net financial position represents the balance between financial assets, which comprise cash, cash equivalents and short-term deposits, and financial debt which includes bank overdrafts and parent companies short-term bridge credit facilities.
Notes to editors
ST-Ericsson invites journalists, analysts and investors to a conference call scheduled on April 27 at 5 pm CET. Call-in numbers, a live webcast of the conference call, as well as supporting slides, will be available at www.stericsson.com/investors/investors.jsp.
ST-Ericsson is a world leader in developing and delivering a complete portfolio of innovative mobile platforms and cutting-edge wireless semiconductor solutions across the broad spectrum of mobile technologies. The company is a leading supplier to the top handset manufacturers and generated sales of $2.3 billion in 2010. ST-Ericsson was established as a 50/50 joint venture by STMicroelectronics (NYSE:STM) and Ericsson (NASDAQ:ERIC) in February 2009, with headquarters in Geneva, Switzerland.
FOR FURTHER INFORMATION, PLEASE CONTACT:
| Global Communications & Media Relations |
Carol Streitberger Brighton, Geneva, Switzerland
| Investor & Analyst Relations|
Fabrizio Rossini, Geneva, Switzerland
Phone: +41 22 929 6973
| Kristina Embring Klang, Lund, Sweden|
Phone: +46 46 103 194
| Public & Media Relations|
Roland Sladek, Geneva, Switzerland
Phone: +41 22 930 2733
| Ericsson Investor Relations |
Asa Konnbjer, Stockholm, Sweden
Phone: +46 10 713 3928
| STMicroelectronics Investor Relations|
Tait Sorensen, Phoenix AZ, US
Phone: +1 602 485 2064
Celine Berthier, Geneva, Switzerland
Phone: +41 22 929 5812
The ST-Ericsson results reported in this press release do not reflect in their entirety the results of the Wireless Segment of STMicroelectronics, which include other activities that are not part of ST-Ericsson.
This press release contains forward-looking statements that involve inherent risks and uncertainties. We have identified certain important factors that may cause actual results to differ materially from those contained in such forward-looking statements. For a detailed description of risk factors see STMicroelectronics' (NYSE:STM) and Ericsson's (NASDAQ:ERIC) filings with the US Securities and Exchange Commission, particularly each company's latest published Annual Report on Form 20-F.