ST Reports 2010 Second Quarter and First Half Financial Results
STMicroelectronics reported financial results for the second quarter and first half ended June 26, 2010. Second quarter net revenues increased 27% on a year-over-year basis, with all regions and market segments, excluding Telecom, posting double-digit revenue growth. Regional growth was led by the Americas with sales growth of 45%, followed by Greater China-South Asia with a 39% increase in net revenues.
President and CEO Carlo Bozotti commented, "ST posted another quarter of improvement in the Company’s financial performance, with revenues, gross margin, operating and net income all showing progressive strengthening sequentially and year-over-year. We were particularly pleased with demand for both IMS and ACCI. In combination, IMS and ACCI delivered sales growth of 51% year-over-year and 16% sequentially. Obviously, we are not satisfied with the results in wireless. However, we are encouraged by ST-Ericsson’s progress in achieving key design-wins as well as restructuring, towards a progressive recovery.
"Gross margin increased 60 basis points sequentially to 38.3% due to manufacturing efficiencies and product innovation. This improvement comes on top of the first quarter sequential increase of 70 basis points. Net income of $356 million reflected the gain on the sale of Numonyx to Micron as well as the improving profitability of our core businesses. As our results demonstrate, we are well positioned to achieve our financial targets as evidenced by the 7.7% adjusted operating margin attributable to ST in the second quarter.
"Thanks to our consistent focus on cash generation, we have further strengthened our net financial position to over $700 million compared to $420 million at the end of 2009."
ST’s net revenues for the second quarter of 2010 totaled $2,531 million and included sales recorded by ST-Ericsson as consolidated by ST. Net revenues increased 8.9% sequentially, mainly reflecting ACCI and IMS product segments registering better than seasonal sequential revenue growth trends while the company’s Wireless segment decreased by 10.5%.
On a year-over-year basis, all market segments, except Telecom, posted growth with Automotive increasing by 48%, Industrial by 43%, Consumer by 42% and Computer by 23%. Telecom declined by 3%. Distribution, increased 81%, reflecting continued strong global demand. Sequentially, all market segments, except Telecom, increased with Consumer higher by 15%, Industrial by 11%, Automotive by 10% and Computer by 6%. Telecom decreased by 2%. Distribution increased sequentially by 22%.
Gross margin in the second quarter of 2010 was 38.3%, 60 basis points higher than the 37.7% reported in the first quarter of 2010, mainly due to manufacturing efficiencies and product innovation. As anticipated, ST’s manufacturing performance continued to improve in the second quarter. Gross margin increased 1,220 basis points in comparison to the year-ago period level of 26.1% principally reflecting a return to normal fab loading as well as ongoing improvement from new products.
Combined SG&A and R&D expenses were $895 million in the second quarter of 2010, compared to $876 million in the prior quarter and $896 million in the year-ago quarter. Combined operating expenses, as a percentage of sales, were 35.4% vs. 37.7% in the prior quarter, and 45.0% in the year-ago quarter.
Related to the company’s cost-realignment initiatives, ST posted second quarter restructuring and impairment charges of $12 million. ST posted restructuring and impairment charges of $33 million and $86 million in the prior quarter and year-ago period, respectively.