| ||
| ||
| ||
 |
|
|
|||||||||||||||||||||||||||||||||||||||||||||
STMicro results fall below target
NEW YORK (Reuters) -- STMicroelectronics, the world's fourth largest chipmaker, posted preliminary first-quarter results on Thursday that fell short of targets due to falling product prices and currency fluctuations. In a statement issued in Geneva, the Franco-Italian company said net revenue for the first quarter ended March 29 would be $1.618 billion, or slightly below the low end of its forecast range of $1.62 billion and $1.68 billion. Analysts surveyed by Thomson First Call had been looking for a mean estimate of $1.66 billion for the first quarter, up from the $1.36 billion reported in the first quarter of 2002. Adam Parker, an analyst with Wall Street brokerage Sanford Bernstein, said the early warning of softer results was only fractionally outside of forecasts, but signaled the pressure the industry was feeling from customers to cut prices. "Their revenue is so close to the bottom of the expected range. It is not an unmitigated disaster," Parker said. "But it could be a barometer that other chipmakers aren't going to have such a great quarter," he said. Shares of STMicroelectronics fell 26 cents, or 1.3 percent during regular session trade on the New York Stock Exchange ahead of the news. In extended hours trading after the warning, shares fell another 2 percent to trade around $19.30. The stock principally trades on the Paris stock market. The surprise announcement from Europe's largest maker of semiconductors came three weeks before April 23, the date the company is scheduled to report its first-quarter results. Parker recommends that investors "hold" ST share, but in effect, buy no further shares for now. He said soft results from ST echoed a warning two weeks ago by Microchip Technology Inc., another broad-based supplier of semiconductors, that global military tensions had dampened sales. ST's results bode poorly for other major chipmakers including wireless chip maker Texas Instruments Inc. and top computer chip maker Intel Corp., he said. Earnings also weakGross margin should be around 35 percent, or below the bottom of its prior estimated range of 36 percent to 37 percent, said the maker of chips used in products ranging from digital music players to mobile phones to automobiles. Profit margins suffered from greater-than-expected pricing pressure for its products and the effects of translating other currencies into a strengthening euro. ST did not comment directly on how the lower results would translate into quarterly earnings per share. Consensus estimates among analysts surveyed by Thomson First Call fell in a range between 11 cents and 14 cents with a mean of 13 cents. Parker estimated that tough pricing conditions and the stronger currency were two factors that could each shave a penny off of expected first-quarter earnings. "It could be that EPS is going to be a couple of cents aggressive," he said of earnings per share forecasts that hover around 13 cents. The diversified chipmaker said it had been hit by order delays in March in a number of its markets, with the notable exception of its digital consumer products. While detailed first quarter financial information is not yet available, the company said it believes that the absolute amount of its operating expenses will be about flat with 2002 fourth quarter levels. Flat expense levels come despite the impact of the strengthened Euro against the U.S. dollar. The company also said it had incurred a non-operating one-time charge of $8.4 million as a result of the March 6, repurchase of about $429 million of the company's convertible debt. The bond buyback should reduce ST's interest expense by about $6 billion for the rest of 2003 and by $10 million in 2004, ST added. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
|
