* Net sales $577 million; 2 percent sequential increase
* Adjusted operating loss[1] $119 million
* Restructuring plans completed; $13 million savings in the quarter
Geneva, Switzerland, January 24, 2011 - ST-Ericsson, a joint venture of
STMicroelectronics (NYSE:STM) and Ericsson (NASDAQ:ERIC), reported financial
results for the fourth fiscal quarter ending December 31, 2010.
"Sales in the fourth quarter came in line with our expectations, even slightly
better," said Gilles Delfassy ST-Ericsson president and CEO. "New products that
started to sell in 2010, which represented more than a quarter of our total
sales in Q4, became a bigger contributor to our revenue growing more than 50
percent sequentially. Continued strong performance from our new 2G/EDGE
platforms in addition to initial HSPA+ modem sales offset weakness in the TD-
SCDMA market and the anticipated decrease in our legacy products.
Operating loss increased sequentially mainly due to higher operating expenses
reflecting anticipated seasonality and currency effects, as well as price
erosion due to our ongoing legacy product transition. However, we also saw $13
million of savings as we completed our restructuring as planned and on time.
Overall, 2010 was a pivotal year for ST-Ericsson. Today, we are well on our way
to completing the transformation of our company like we set out to do - focusing
on expanding our product portfolio to the smartphone and tablet markets, where
we aim to be a leader with best-in-class modems and application solutions. In
fact, we are seeing increasing traction in these markets with products such as
our U8500 smartphone platform, which we plan to ramp in the second half of the
year with several Tier 1 customers.
In 2011, our focus is to deliver our exciting new products to customers and
improve financial performance as we complete our transition. While our near-term
outlook is challenging, we are making good progress and are confident that our
work will put us on the path to market leadership and sustainable profitable
growth."
2010 Fourth quarter financial summary (unaudited)
$ million |Q4 2010|Q3 2010|Q4 2009
--------------------------------------------------+-------+-------+-------
Income Statement | | |
--------------------------------------------------+-------+-------+-------
NET SALES | 577| 565| 740
--------------------------------------------------+-------+-------+-------
OPERATING INCOME/(LOSS) ADJUSTED[1] for: | (119)| (85)| (50)
--------------------------------------------------+-------+-------+-------
| | |
- amortization of acquisition-related intangibles| (28)| (25)| (27)
--------------------------------------------------+-------+-------+-------
- restructuring charges | (24)| (19)| (62)
--------------------------------------------------+-------+-------+-------
OPERATING INCOME / (LOSS) as reported | (171)| (129)| (139)
--------------------------------------------------+-------+-------+-------
NET INCOME / (LOSS) | (177)| (121)| (125)
$ million |Q4 2010|Q3 2010|Q4 2009
---------------------------------------------+-------+-------+-------
Net Financial Position | | |
---------------------------------------------+-------+-------+-------
Cash, cash equivalents & short-term deposits| 68| 89| 229
---------------------------------------------+-------+-------+-------
Parents' short-term credit facilities | -150| -50| 0
---------------------------------------------+-------+-------+-------
Net Financial Position[2] | -82| 39| 229
Additional financial information
The net financial position[2] at the end of the fourth quarter was negative $82
million, which compares to positive $39 million at the end of the third quarter.
During the fourth quarter the company sold trade receivables without recourse,
of which $166 million were outstanding at the end of the quarter, representing a
sequential decrease of $13 million.
Inventory decreased by $20 million reaching $275 million at the end of the
fourth quarter.
Outlook
For the first quarter 2011, the company expects net sales to decline
sequentially, reflecting both the accelerating decline of legacy products and
the effect of first quarter seasonality.
Highlights - products, technology and wins publicly announced in fourth quarter
2010
* In November, ST-Ericsson announced the collaboration with Quanta Computer on
LTE modules and USB dongles. The partnership was highlighted by a live video
demonstration on a Quanta Computer tablet over TD-LTE network at the closing
ceremony of Expo 2010 Shanghai China.
* ST-Ericsson announced it is joining forces with Nokia to drive TD-LTE in
China. At Expo 2010 Shanghai China, ST-Ericsson and Nokia demonstrated video
streaming and other multimedia services on a TD-LTE Nokia booklet containing
ST-Ericsson's M700 TD-LTE thin modem.
* In December, Samsung selected ST-Ericsson's single G4906 GSM/GPRS platform
for its Ch@t 322 Dual-SIM Dual-Standby mobile telephone, launched in Russia,
the Commonwealth of Independent States (CIS), Southeast Asia, India, China,
Middle East, and Africa.
* In December, Australian telecommunication operator Telstra, together with
Acer and Ericsson, launched the first netbook with a built-in 21Mbps HSPA+
mobile broadband module, based on ST-Ericsson's M570 thin modem.
Financial results appendix (unaudited)
Annual financial results
| 2010| 2009| 2009
$ million |ACTUAL|ACTUAL|PRO-FORMA
-----------------------------------------+------+------+---------
Income Statement | | |
-----------------------------------------+------+------+---------
NET SALES | 2293| 2524| 2695
-----------------------------------------+------+------+---------
OPERATING INCOME/(LOSS) ADJUSTED[1] for:| (436)| (369)| (440)
-----------------------------------------+------+------+---------
- amortization of acquisition-related | | |
intangibles | (101)| (96)| (106)
-----------------------------------------+------+------+---------
- restructuring charges | (74)| (116)| (116)
-----------------------------------------+------+------+---------
OPERATING INCOME / (LOSS) as reported | (611)| (581)| (662)
-----------------------------------------+------+------+---------
NET INCOME / (LOSS) | (591)| (539)| (612)
2010 financial results by quarter
$ million |Q4 2010|Q3 2010|Q2 2010|Q1 2010
-----------------------------------------------+-------+-------+-------+-------
Income Statement | | | |
-----------------------------------------------+-------+-------+-------+-------
NET SALES | 577| 565| 544| 606
-----------------------------------------------+-------+-------+-------+-------
OPERATING INCOME/(LOSS) ADJUSTED[1] for: | (119)| (85)| (118)| (114)
-----------------------------------------------+-------+-------+-------+-------
- amortization of acquisition-related | | | |
intangibles | (28)| (25)| (25)| (24)
-----------------------------------------------+-------+-------+-------+-------
- restructuring charges | (24)| (19)| (5)| (27)
-----------------------------------------------+-------+-------+-------+-------
OPERATING INCOME / (LOSS) as reported | (171)| (129)| (148)| (164)
-----------------------------------------------+-------+-------+-------+-------
NET INCOME / (LOSS) | (177)| (121)| (139)| (154)
2009 financial results by quarter
| | | | Q1 2009|Q1 2009
$ million |Q4 2009|Q3 2009|Q2 2009|PRO-FORMA [3]| ACTUAL
---------------------------------+-------+-------+-------+-------------+-------
Income Statement | | | | |
---------------------------------+-------+-------+-------+-------------+-------
NET SALES | 740| 728| 666| 562| 391
---------------------------------+-------+-------+-------+-------------+-------
OPERATING INCOME/(LOSS) | | | | |
ADJUSTED[1] for: | (50)| (77)| (165)| (149)| (78)
---------------------------------+-------+-------+-------+-------------+-------
- amortization of acquisition- | | | | |
related | | | | |
intangibles | (27)| (25)| (24)| (30)| (20)
---------------------------------+-------+-------+-------+-------------+-------
- restructuring charges | (62)| (19)| (35)| 0| 0
---------------------------------+-------+-------+-------+-------------+-------
OPERATING INCOME / (LOSS) as | | | | |
reported | (139)| (121)| (224)| (179)| (98)
---------------------------------+-------+-------+-------+-------------+-------
NET INCOME / (LOSS) | (125)| (112)| (213)| NA| (89)
Footnotes
[1] The adjusted operating income/(loss) is defined as the operating
income/(loss) reported before amortization of acquisition-related intangibles
and restructuring charges and is used by management to help enhance the
understanding of ongoing operations and to communicate the impact of the items
on the operating loss as reported.
[2] Net financial position represents the balance between financial assets,
which comprise cash, cash equivalents and short-term deposits, and financial
debt which includes bank overdrafts and parent companies short-term bridge
credit facilities.
[3] The unaudited pro-forma results are presented as if the ST-Ericsson joint
venture had been created on January 1, 2009 and incorporates the results of ST-
Ericsson and predecessors (ST-NXP Wireless and Ericsson Mobile Platforms)
beginning on that date (while effectively it started operations on February
2, 2009). Such results are presented for information purposes only and are not
indicative of the results of operations that would have been achieved had the
acquisition taken place as of January 1, 2009.
Notes to editors
ST-Ericsson invites media, analysts and investors to a conference call scheduled
on January 25 at 5:00pm CET. Call-in numbers, a live webcast of the conference
call, as well as supporting slides, will be available
atwww.stericsson.com/investors/investors.jsp.
About ST-Ericsson
ST-Ericsson is a world leader in developing and delivering a complete portfolio
of innovative mobile platforms and cutting-edge wireless semiconductor solutions
across the broad spectrum of mobile technologies. The company is a leading
supplier to the top handset manufacturers and ST-Ericsson's products and
technologies enable more than half of all phones in use today. The company
generated sales of $2.3 billion in 2010. ST-Ericsson was established as a 50/50
joint venture by STMicroelectronics (NYSE:STM) and Ericsson (NASDAQ:ERIC) in
February 2009, with headquarters in Geneva, Switzerland.www.stericsson.com
www.twitter.com/STEricssonForum
FOR FURTHER INFORMATION, PLEASE CONTACT:
Global Communications & Media Relations
Carol Streitberger Brighton, Geneva,
Switzerland
Public & Media Relations Investor & Analyst Relations
Roland Sladek, Geneva, Switzerland Fabrizio Rossini, Geneva, Switzerland
Phone: +41 22 930 2733 Phone: +41 22 929 6973
Email: investor.relations@stericsson.com
Kristina Embring Klang, Lund, Sweden
Phone: +46 46 103 194
Email:media.relations@stericsson.com
Ericsson Investor Relations STMicroelectronics Investor Relations
Susanne Andersson, Stockholm, Sweden Tait Sorensen, Phoenix AZ, US
Phone: +46 10 719 4631 Phone: +1 602 485 2064
E-mail:investor.relations@ericsson.com Celine Berthier, Geneva, Switzerland
Phone: +41 22 929 5812
Email:investors@st.com
###
The ST-Ericsson results reported in this press release do not reflect in their
entirety the results of the Wireless Segment of STMicroelectronics, which
include other activities that are not part of ST-Ericsson.
###
This press release contains forward-looking statements that involve inherent
risks and uncertainties. We have identified certain important factors that may
cause actual results to differ materially from those contained in such forward-
looking statements. For a detailed description of risk factors see
STMicroelectronics' (NYSE:STM) and Ericsson's (NASDAQ:ERIC) filings with the US
Securities and Exchange Commission, particularly each company's latest published
Annual Report on Form 20-F.
[HUG#1481961]
