PR No. C2590C
STMicroelectronics
Updates 2008 Fourth Quarter Outlook
Geneva, November 28, 2008 -
STMicroelectronics (NYSE: STM) announced today that its revenue for the fourth quarter would be below the outlook provided in the
Company’s news release dated October 28, 2008. Based on current visibility,
the Company now expects
fourth quarter revenues to be between approximately $2.2 billion and $2.35 billion, as compared to $2.7 billion reported in the prior quarter, or a sequential change in the range of about -12.8% to -18.4%. The revised revenue outlook is the consequence of a recent slowdown in the billings, recent and substantial changes in customers’ demand and order push-outs for the month of December.
This situation reflects the well-known weaknesses in the industry, across most geographies and market segments, and, in particular, in wireless, automotive, and computer peripherals.
The
Company is reacting to the weaker-than-anticipated demand environment with a
further reduction of manufacturing activity and reduced sourcing from
third-party suppliers, compared to planned activities when entering the quarter.
Primarily as a result of higher-than-anticipated unused capacity charges in the
quarter, the gross margin expected for the fourth quarter 2008 is now about 38%
plus or minus one percentage point.
Additionally,
the Company continues to aggressively implement cost-control initiatives and is
progressing in its accelerated effort to capture the cost synergies from the
recent creation of ST-NXP Wireless.
This
outlook is based on an assumed effective currency exchange rate of approximately
$1.40 = €1.00 for the 2008 fourth quarter, which reflects current exchange rate
levels combined with the impact of existing hedging contracts. Additionally, as
per the prior outlook for Q4 2008 released on October 28, 2008, this
outlook includes the results of the ST-NXP Wireless joint venture - which began
operations on August 2, 2008 - for the full quarter, but excludes an estimated
$30 million cost in the fourth quarter 2008 due to inventory step-up purchase
accounting adjustments related to the former NXP Wireless business.
Some
of the statements contained in this release that are not historical facts are
statements of future expectations and other forward-looking statements (within
the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the
Securities Exchange Act of
1934,
each as amended) based on management’s current views and assumptions and involve
known and unknown risks and uncertainties that could cause actual results,
performance or events to differ materially from those in such statements due to,
among other factors:
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further deterioration on the
worldwide financial markets, economic recession in one or more of the
world’s major economies and the effect on demand for
semiconductors
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Additional
factors are mentioned in our press release of October 28th,
2008.
Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described in this release as anticipated, believed or expected. We do not
intend, and do not assume any obligation, to update any information or
forward-looking statements set forth in this release to reflect subsequent
events or circumstances.
Unfavorable changes in the above or
other factors listed under “Risk Factors” from time to time in our SEC filings,
including our Form 20-F, could have a material adverse effect on our results of
operations or financial condition.
About
STMicroelectronics
STMicroelectronics is a global leader in
developing and delivering semiconductor solutions across the spectrum of
microelectronics applications. An unrivalled combination of silicon and system
expertise, manufacturing strength, Intellectual Property (IP) portfolio and
strategic partners positions the Company at the forefront of System-on-Chip
(SoC) technology and its products play a key role in enabling today’s
convergence markets. The Company’s shares are traded on the New York Stock
Exchange, on Euronext Paris and on the Milan Stock Exchange. In 2007, the
Company’s net revenues were $10 billion. Further information on ST can be found
at www.st.com.
For further information,
please contact:
INVESTOR
RELATIONS:
Tait
Sorensen
Director,
Investor Relations
Tel: +1
602 485 2064
tait.sorensen@st.com
MEDIA
RELATIONS:
Maria
Grazia
Prestini
Senior
Director, Corporate Media and Public Relations
STMicroelectronics
Tel: + 41
22 929 6945
mariagrazia.prestini@st.com