STMicroelectronics reported financial results for the third quarter and nine months ended September 30, 2006. Net revenues for the third quarter were $2,513 million, 11.8% above the $2,247 million reported in last year's third quarter. This year-over-year growth was driven by double-digit increases in the telecom, industrial and consumer market segments. Sequentially, net revenues grew 0.7% from the $2,495 million reported in the prior quarter, with the growth coming from industrial, consumer and application-specific wireless products.
Gross profit was $904 million for the 2006 third quarter, an increase of $138 million from $766 million in last year's third quarter. Gross margin was 36.0% in the third quarter, an increase of 190 basis points from 34.1% in last year's third quarter. On a sequential basis, gross profit and gross margin increased from the second quarter levels of $882 million and 35.4%, respectively. Combined selling, general & administrative and research & development expenses represented 27.2% of net revenues in the third quarter, compared to 28.9% in the year-ago quarter and 27.0% in the second quarter of 2006. R&D expenses of $421 million in the third quarter were 3% higher than the $408 million in the prior quarter, reflecting increased effort in process technology and dedicated products. SG&A expenses were 1% lower sequentially at $264 million for the 2006 third quarter compared to $266 million in the second quarter.
ST delivered significant year-over-year improvements in profitability measures with operating income up 90%, operating margin expanding 320 basis points, and earnings per share more than doubling. Specifically, for the 2006 third quarter, the company reported operating income of $194 million, an operating margin of 7.7% (8.5% excluding restructuring and impairment charges), and net income of $207 million, or $0.22 per diluted share. In the year-ago quarter, the company reported operating income of $102 million, equal to an operating margin of 4.5% (5.1% excluding restructuring and impairment charges), and net income of $89 million or $0.10 per share. In the prior quarter, the company reported operating income of $169 million, operating margin of 6.8% (8.1% excluding restructuring and impairment charges), and net income of $168 million or $0.18 per diluted share.
