STMicro Reports Q4 Total Revenues Flat from Q3, Power Discrete Revenues Down 11%

January 29, 2013 by Jeff Shepard

STMicroelectronics reported financial results for the fourth quarter and full year ended December 31, 2012. Fourth quarter net revenues totaled $2.16 billion, down 1.3% from the same period last year and gross margin was 32.3%, down from 33.4% in the year-earlier period. Net loss attributable to parent company was $428 million, mainly due to a charge of $544 million for the impairment of Wireless goodwill and other intangible assets following the company's decision to exit the ST-Ericsson joint venture after the communicated transition period as part of the new strategic plan announced on December 10, 2012.

Power Discrete (PDP) fourth quarter net revenues decreased 11.0% sequentially due to weak market demand. PDP operating margin decreased to 1.1% in the 2012 fourth quarter compared to 6.4% in the prior quarter due to lower revenues.

Automotive (APG) fourth quarter net revenues decreased 6.0% sequentially, mainly driven by difficult market conditions. APG fourth quarter operating margin was 5.6%, compared to 8.6% in the prior quarter due to lower revenues.

Analog, MEMS and Microcontrollers (AMM) fourth quarter net revenues increased 7.4% sequentially driven by MEMS, secure microcontrollers and analog applications. AMM operating margin increased to 13.9% in the 2012 fourth quarter, compared to 12.6% in the prior quarter mainly due to higher volumes of motion MEMS.

Digital fourth quarter net revenues decreased 1.7% sequentially principally due to weak demand for digital consumer products. Digital operating margin was negative 15.8% in the 2012 fourth quarter mainly due to manufacturing efficiencies related to a sharp decrease in loadings, compared to negative 9.0% in the prior quarter.

Wireless net revenues in the fourth quarter decreased 2.2%, compared to the prior quarter. Revenue results reflected ST-Ericsson's continued ramp of NovaThor platforms as well as $43 million from IP licensing, which was more than offset by the decrease in legacy products sales. Wireless operating loss, excluding ST-Ericsson impairment and restructuring charges, was $168 million in the fourth quarter, compared to a loss of $184 million in the prior quarter.

President and CEO Carlo Bozotti commented, "In the fourth quarter, both revenue and gross margin results came in above the midpoint of our guidance despite the ongoing softness in the semiconductor market. We extended our leadership in key areas. Thanks to new product momentum, revenues from our wholly-owned businesses increased 0.2% and 1.6% on a sequential and year-ago basis driven by a very strong ramp of our MEMS products in the fourth quarter.

"Looking at 2012 overall, we improved our net financial position compared to 2011 despite the significant cash used by ST-Ericsson as well as the impact of weak business conditions. We were able to end the year with significant financial flexibility and strong cash balances while providing shareholders with the same level of dividend compared to 2011.

"Important decisions were made in 2012 that are shaping a new, more focused, higher-performing ST. In December, we announced our new strategic plan targeting leadership in two product segments: Sense & Power and Automotive Products and Embedded Processing Solutions. This new strategy includes a sharper focus on five growth drivers: MEMS and sensors, Smart Power, automotive products, microcontrollers, and application processors including digital consumer products. Importantly, from a financial model perspective, we are targeting an operating margin of 10% or more. A key component to achieving this objective is bringing our net operating expenses to an average quarterly rate in the range of $600 million to $650 million by the beginning of 2014.

"In connection with our strategic plan, we decided to exit ST-Ericsson after a transition period and our actions this past quarter, including the further impairment charge, are aligned with moving this decision forward."