STMicroelectronics Reports 2010 Fourth Quarter and Full Year Financial Results

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2011-01-25 17:28

SEOUL--(뉴스와이어)--STMicroelectronics (NYSE: STM) reported financial results for the fourth quarter and full year ended December 31, 2010.

President and CEO Carlo Bozotti commented, “ST had a very strong finish to the year. Our fourth quarter revenues came in near the top end of our range, increasing 6.6% sequentially on broad-based strength in analog, MEMS, microcontrollers and automotive applications. Our gross margin further increased to 39.9%, up 70 basis points sequentially, coming in above the midpoint of our guidance.

“ACCI and IMS again achieved record sales this quarter, accompanied by further improvements at the operating profit level, with ACCI operating margin increasing to 11.9% and IMS rising to 22.5%. In wireless, while operating losses remain very significant, ST-Ericsson has completed its restructuring and is now well on its way to complete the transition to its new product portfolio. Overall, ST’s strong sales results, driven by our innovative product portfolio combined with our restructuring efforts, enabled ST to generate net earnings of $830 million for the year.

“In 2010, we were well prepared to take advantage of significantly better industry conditions with the right portfolio and we have started to turn our vision of leadership in ‘Sense and Power’ applications and in multimedia convergence into reality. In the last eight quarters, ST went through the most severe economic recession in 2009 and successfully capitalized on the 2010 market recovery. Throughout this timeframe we remained focused on our growth and profitability objectives. Today, our innovative products, which have leadership positions in highly successful applications, customer base and solid capital structure, make us a much stronger company.”

Fourth Quarter Review

ST’s net revenues for the fourth quarter of 2010 totaled $2,833 million and included sales recorded by ST-Ericsson as consolidated by ST.

Fourth quarter net revenues increased on a year-over-year basis by 30% in Industrial and Multisegment Sector (IMS), and 15% in Automotive/Consumer/Computer/Communication Infrastructure Sector (ACCI), while Wireless, reflecting the ongoing portfolio transition at ST-Ericsson, decreased by 21%. Overall fourth quarter net revenues increased by 9.7% on a year-over-year basis, geographically led by Greater China-South Asia with sales growth of 15% and the Americas with a 14% increase.

On a year-over-year basis, all market segments, except Telecom, posted growth, with Automotive up by 27%, Industrial & Other by 18%, Consumer by 14%, and Computer by 7%. Telecom declined by 7%. Distribution increased 25%.

Sequentially, revenues grew in all regions, led by Japan-Korea, Greater China-South Asia and Americas with 10%, 8% and 7% growth, respectively.

All market segments increased on a sequential basis, except Consumer, with Automotive higher by 16%, Industrial & Other by 13%, Computer by 10%, and Telecom by 7%. Consumer decreased by 6% on weakening demand. Distribution increased sequentially by 4%.

Gross margin increased again in the fourth quarter of 2010 to 39.9%, 70 basis points higher than the 39.2% reported in the prior quarter, thanks to manufacturing efficiencies and product innovation. Gross margin improved significantly compared to 37.0% in the year-ago period, principally reflecting higher volumes, strong fab loading, as well as ongoing improvements from new products.

Combined SG&A and R&D expenses were $914 million in the fourth quarter of 2010 compared to $839 million and $906 million in the prior and year-ago quarters, respectively. As anticipated, combined SG&A and R&D expenses in the fourth quarter increased, reflecting a longer quarter and unfavorable seasonal effects which were partially offset by cost-realignment initiatives. Combined operating expenses, as a percentage of sales, were 32.3% vs. 31.6% in the prior quarter, and 35.1% in the year-ago quarter.

Related to the Company’s cost-realignment initiatives, primarily in ST-Ericsson, ST posted fourth quarter impairment and restructuring charges of $32 million. ST posted impairment and restructuring charges of $27 million and $96 million in the prior quarter and year-ago period, respectively.

ST reported an operating profit of $213 million or 7.5% of net revenues in the fourth quarter of 2010, compared to a profit of $193 million or 7.3% in the prior quarter and a loss of $6 million in the year-ago quarter.

Revenues and Operating Results by Product Segment

ACCI (Automotive/Consumer/Computer/Communication Infrastructure Product Groups) fourth quarter net revenues increased 15% year-over-year to a record $1,128 million driven by strong growth in Automotive and Telecom applications. Sequentially, ACCI grew net revenues 4%, also led by robust demand in Automotive and Telecom while, as expected, Digital Consumer decreased due to weaker market conditions. ACCI operating margin improved, both sequentially and year-on-year, to 11.9%, from 11.7% and 6.3%, in the prior and year-ago quarters, respectively.

IMS (Industrial and Multisegment Product Sector) fourth quarter net revenues increased 30% year-over-year to a record $1,131 million. Revenue growth was strong in all segments and in distribution. Sequentially, IMS grew net revenues 12%, led by MEMS, microcontrollers, power and industrial products. IMS operating margin improved, both sequentially and year-on-year, to 22.5% from 19.7% and 9.8% in the prior and year-ago quarters, respectively.

Wireless net revenues in the fourth quarter increased 3% sequentially to $562 million, reflecting continued strong performance from ST-Ericsson’s new 2G/EDGE platforms and initial HSPA+ modem sales offset by weakness in the TD-SCDMA market and the anticipated decrease in legacy products. Wireless operating loss, excluding $24 million of restructuring charges, in the fourth quarter was $136 million. Wireless operating loss, excluding non-controlling interest, was $64 million in the fourth quarter compared to a loss of $37 million and $11 million in the prior and year-ago periods. Sequentially, Wireless results reflect increased losses at ST-Ericsson due to anticipated seasonality and currency effects, as well as price erosion due to their ongoing legacy product transition.

ST recorded $83 million of income in the fourth quarter of 2010 compared to $60 million and $59 million in the prior and year-ago quarters, respectively, reflecting the net results attributable to non-controlling interest, mainly related to the ST-Ericsson joint venture. This amount is posted below operating results in ST’s Consolidated Income Statement and reflects primarily Ericsson’s 50% share in the joint venture’s results, as consolidated by ST.

For additional information, including key design wins, on ST-Ericsson, see www.stericsson.com

Net Results

ST reported net income of $219 million in the fourth quarter of 2010, or $0.24 per diluted share, compared to net income of $198 million in the prior quarter and a net loss of $70 million in the year-ago period. On an adjusted basis, excluding restructuring charges and loss on the sale of Micron shares, ST reported fourth quarter 2010 net earnings of $0.27 per diluted share. In the third quarter of 2010 and fourth quarter of 2009, the Company reported on an adjusted basis a net income of $0.23 per diluted share and of $0.04 per diluted share, respectively.

For the 2010 fourth quarter, the effective average exchange rate for the Company was approximately $1.34 to €1.00 compared to $1.34 to €1.00 for the 2010 third quarter and $1.43 to €1.00 for the 2009 fourth quarter.

Cash Flow and Balance Sheet Highlights

Net operating cash flow was $349 million compared to $224 million and $247 million in the prior and year ago periods, respectively. For the full year 2010, net operating cash flow was $961 million.

In the fourth quarter ST realized net proceeds of $319 million from selling a substantial part of the Micron shares received in 2010 as a result of its final divestiture of the Flash memory business. The approximately 20 million remaining shares are fully hedged.

Capital expenditures were $423 million during the fourth quarter of 2010 compared to $298 million in the prior quarter. Expenditures were principally for front-end equipment to support various technologies and to support the ramp of new products for the current and upcoming quarters for MEMS, the U8500 smartphone platform as well as a capacity increase for automotive products. For the 2010 full year period, capital expenditures totaled $1,034 million. Combined capital expenditures for the years 2009-10 were 7.9% as a percentage of net revenues.

Inventory was $1.50 billion at quarter end compared to $1.43 billion at September 25, 2010. In the fourth quarter inventory turns were 4.6.

ST, during the quarter, continued its debt buy-back programs related to its outstanding 2016 convertible bonds and 2013 Eurobond. In the year, $510 million have been repurchased, out of which $121 million were repurchased in the fourth quarter.

Excluding $161 million of Micron shares currently held as marketable securities, ST’s net financial position increased significantly to a net cash position of $1,152 million at December 31, 2010 compared to $878 million at September 25, 2010 and $420 million at December 31, 2009. ST’s cash and cash equivalents, short-term deposits, marketable securities (current and non-current, excluding remaining Micron shares) equaled $2.92 billion. Total debt was $1.77 billion.

Total equity was $8.50 billion, including non-controlling interest of $0.9 billion.

In the fourth quarter the Company posted a return on net assets (RONA) attributable to ST of 20.7%.

Mr. Bozotti said “Over the last two years we have completed our product portfolio repositioning and funded the restructuring of operations. Our net financial position has improved significantly by about $1.7 billion while, at the same time, making the appropriate level of investment to fuel revenue growth.”

Legal proceedings with respect to the collection of approximately $358 million due to ST by Credit Suisse pursuant to the FINRA award are continuing, with trial before the Court of Appeals of the Federal Circuit currently set to occur as from the last week of March 2011.

2010 Full Year Results

Net revenues for the full year 2010 increased 21.6% to a record $10,346 million from $8,510 million in the prior year, thanks to a broad and deep product portfolio and significantly better industry conditions, with IMS and ACCI increasing 45% and 32%, respectively.

IMS revenue growth benefited from two structural changes which have been well underway. First, advanced analog and MEMS products are becoming an increasing proportion of the overall IMS portfolio. Second, IMS is benefiting from the success of its general-purpose and secure microcontroller families.

ACCI revenue growth was driven by all key products families: ICs for automotive, set-top-boxes, computer peripherals, printers in particular, and communication infrastructure applications.

Wireless revenues in 2010 decreased by 14% compared to the prior year. ST-Ericsson is well on its way to completing its transformation to focus on expanding its product portfolio to serve the smartphone and tablet markets with best-in-class modems and application solutions. ST-Ericsson is seeing increasing traction in these markets with products such as their U8500 smartphone platform, which they plan to ramp in the second half of the year with several Tier 1 customers.

Gross margin for ST was 38.8% of net revenues, compared to 30.9% of net revenues in 2009, reflecting significantly improved fab loading and the success of the Company’s product offering.

Net income, as reported, was $830 million in 2010, or $0.92 per diluted share, compared to a net loss of $1,131 million, or $1.29 per share in 2009.

On a year-over-year basis, the effective average exchange rate for the Company was approximately $1.36 to €1.00 for 2010, compared to $1.37 to €1.00 for 2009.

Mr. Bozotti commented, “In 2010, our continued effort to develop new and exciting products has started to translate into profitability with substantial leverage as operating results improved in 2010 by $1.31 billion on $1.84 billion of higher sales.”

First Quarter 2011 Business Outlook

Mr. Bozotti stated, “As we enter 2011 key new products continuing to ramp will include gyroscopes, accelerometers, 32-bit microcontrollers, and automotive products among others. New products that will contribute to our growth in the coming quarters include SoCs for 3-D and connected TVs, MEMS microphones and pressure sensors and advanced analog products for medical and smart grid applications. Also, ST-Ericsson will ramp new products, such as their thin modem and, in the second half of the year, U8500 smartphone platform.

“While the semiconductor industry is expected to grow in 2011, although at a much more moderate rate compared to the strong growth in 2010, we expect to deliver above-market revenue growth accompanied by further year-over-year improvements in quarterly operating profitability. We are well positioned for success in our traditional and new growth markets, including energy savings, data security, healthcare and wellness as well as smart consumer devices.”

In order to support ST’s innovative product portfolio and to fuel revenue growth faster than the served market dynamic, particularly for MEMS, automotive and the U8500 smartphone platform, the Company expects to invest approximately $1.1 billion to $1.5 billion in 2011 based on revenue growth.

In-line with normal seasonality, the high exposure to New-Year holidays in Asia and the accounting calendar, the Company expects first quarter 2011 revenues to be lower sequentially by about 7% to 12%, which at the midpoint equates to a 10% increase when compared to the year-over-year period. As a result, and based on prices entering the new year contracts, gross margin in the first quarter is expected to be about 39.0%, plus or minus 1 percentage point.

This outlook is based on an assumed effective currency exchange rate of approximately $1.32 = €1.00 for the 2011 first quarter. The first quarter will close on April 2, 2011.

ST마이크로일렉트로닉스 개요
ST마이크로일렉트로닉스는 혁신적인 반도체 솔루션을 다양한 전자 애플리케이션 분야의 고객들에게 제공하고 있는 세계적인 선도업체이다. ST는 자사의 방대한 기술, 설계 전문기술 및 IP 포트폴리오 통합, 전략적 협력업체와 강력한 제조시설 등을 활용하여 멀티미디어 컨버전스 및 전력 애플리케이션 분야에서 명실상부한 선도업체가 되는 것을 목표로 하고 있다. ST의 2010년도 매출은 103억 5,000만 달러이다. ST에 대한 보다 상세한 정보는 www.st.com를 참조하라.

웹사이트: http://www.st.com