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Infineon Reports Fiscal Second-Quarter Revenue Drop

April 25, 2005 by Jeff Shepard

Infineon Technologies AG (Germany) reported a loss and drop in revenue for its fiscal second quarter. Net loss was $148 million (€114 million), down from net income of $185 million (€142 million) sequentially, while revenues were $2 billion (€1.61 billion), down 12% sequentially.

The company cited pricing pressure as the reason for its quarter-over-quarter slips, noting falling prices in its memory products group and automotive, industrial and multi-market segment. In the communications segment, sales volumes decreased as a result of a seasonal slow-down of the worldwide mobile phone market, coupled with a greater than seasonal decline in demand from some customers. Infineon reorganized its business into the memory products group and automotive and industrial groups, effective January 1, 2005. The company now expects that further reorganization is needed.

"Our cautious assessment of market conditions and the outlook for the last quarter unfortunately turned out to be accurate," said Infineon CEO and President Wolfgang Ziebart. "In this difficult environment, we concentrated our efforts on optimizing our business setup, and have already achieved several milestones. Back in the first quarter of this financial year, we took immediate action and implemented the fast and effective Smart Savings program. We then simplified the organization to create leaner structures and faster decision paths to allow us to better serve our customers. As a third step, we are focusing on restructuring non-profitable businesses."

Infineon said it anticipates no major improvement in demand in its fiscal third quarter, and that it expects continued pricing pressure, especially for chip-card ICs, memory and mobile phone products.