* Net sales $740 million; 2% sequential increase
* Adjusted operating loss[1] $50 million
* Restructuring plans on track, additional $115 million savings announced in
December
Geneva, Switzerland, January 22, 2010 - ST-Ericsson, a joint venture of
STMicroelectronics (NYSE:STM) and Ericsson (NASDAQ:ERIC), reports financial
results for the fourth quarter 2009.
President and CEO, Gilles Delfassy, commented: "In the fourth quarter, we gained
further momentum in one of the fastest growing markets, China, where we are the
clear leader in its standard TD-SCDMA, having delivered more than 6.5 million
chipsets by the end of December 2009. In addition, we have taken further actions
to improve our financial performance and increase our competitiveness.
2009 has been a challenging year for our industry. For ST-Ericsson, the
challenge was especially great. We had to strive to maintain our positioning,
while also setting the foundations for sustainable and profitable growth. We
will achieve this by rapidly integrating the businesses we have merged and by
transitioning to the new portfolio strategy we devised for our next generation
offering. During its first year, the company has made good progress in all
areas, but more still needs to be done.
Our industry is evolving to embrace a wider multimedia ecosystem; the mobile
platform has now become the convergence point for most consumer electronics,
changing consumers' lives and opening up new opportunities even outside the
traditional handset market. We are well positioned to remain a leading player,
thanks to the combination of our advanced modem expertise and multimedia
processing capabilities. We will build on these strengths to prepare the company
for future, profitable growth."
Fourth quarter 2009 financial highlights (unaudited)
Q3 2009 Q4 2008
$ million Q4 2009 PRO-FORMA
Income Statement
NET SALES 740 728 746
OPERATING INCOME/(LOSS) ADJUSTED[1] for: (50) (77) (98)
- amortization of acquisition-related
intangibles (27) (25) (25)
- restructuring charges (62) (19) (4)
OPERATING INCOME / (LOSS) as reported (139) (121) (127)
NET INCOME / (LOSS) (125) (112) NA
Net sales reported a 2% sequential increase driven by continued demand in China.
The operating loss of $50 million, excluding amortization of acquisition-related
intangibles and restructuring charges, compares to a $77 million operating loss
reported in the third quarter 2009 and it reflects reduced operating expenses.
Inventory management continued to produce positive results thanks to improved
efficiency in the supply chain. Inventory declined by $33 million, reaching a
level of $244 million at the end of the quarter.
Net cash[2] was $229 million at the end of fourth quarter 2009, a sequential
increase of $13 million, including improved working capital and a one-time
payment of $53 million from parent companies related to final merger transaction
adjustments already planned since the inception of the company.
Update on restructuring plans
The $250 million cost synergies program defined by ST-NXP Wireless is now fully
completed.
The $230 million savings restructuring plan, announced on April 29 2009 and due
to be completed by the second quarter of 2010, is currently in progress and its
effects in the fourth quarter 2009 have been in line with plans.
On December 3 2009, ST-Ericsson announced its proposed plan to further improve
financial performance and increase competitiveness in the market.
This plan is targeting additional annualized savings of $115 million that are
expected to come from reductions in operating expenses and spending, along with
an extensive R&D efficiency program. As part of this effort, the company is also
conducting a global workforce review which may affect up to an additional 600
employees worldwide. The targeted time of completion of this plan is end of
2010.
The company estimates that the remaining costs associated with the ongoing
restructuring plans will be incurred within 2010.
Market evolution
While medium term visibility is somewhat limited, first quarter 2010 is expected
to be characterized by the usual market seasonal decline.
Q4 2009 highlights - products, technology and wins
LG Electronics selected ST-Ericsson's mobile HSPA broadband modem, M340 to power
the LG GW990 mobile internet device which will be launched in the second half of
2010. The M340 is part of the mobile platforms solution, together with the
Intel Moorestown solution. The M340 is a small, flexible modem solution with low
power consumption enabling high speed internet access.
Nokia and ST-Ericsson announced a long-term partnership in the area of TD-SCDMA
technology and solutions. The partnership will see Nokia using ST-Ericsson as a
key supplier of chipset platforms in its Symbian based TD-SCDMA devices and
solutions portfolio.
ST-Ericsson, together with Ericsson, announced the companies successfully
achieved first mobility between LTE and HSPA networks, using a multimode
LTE/HSPA device powered by ST-Ericsson's M710 platform.
In October, the company announced cooperation with ARM to accelerate innovation
in mobile user experience. ST-Ericsson's U8500 is the first smartphone platform
to integrate a Mali-400TM graphics processing unit providing access to a
leading-edge environment for graphics developers.
Financial results appendix
Pro-forma information: 2009 vs. 2008 (unaudited)[3]
2009 2009 2008
$ million ACTUAL PRO-FORMA PRO-FORMA
Income Statement
NET SALES 2524 2695 3,577
OPERATING INCOME/(LOSS) ADJUSTED[1] for: (369) (440) (297)
- amortization of acquisition-related
intangibles (96) (106) (100)
- restructuring charges (116) (116) (4)
OPERATING INCOME / (LOSS) as reported (581) (662) (401)
NET INCOME / (LOSS) (539) (612) NA
2009 by quarter (unaudited)[3]
Q1 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2009
$ million ACTUAL PRO-FORMA
Income Statement
NET SALES 391 562 666 728 740
OPERATING INCOME/(LOSS) ADJUSTED[1]
for: (78) (149) (165) (77) (50)
- amortization of
acquisition-related
intangibles (20) (30) (24) (25) (27)
- restructuring charges 0 0 (35) (19) (62)
OPERATING INCOME / (LOSS) as
reported (98) (179) (224) (121) (139)
NET INCOME / (LOSS) (89) NA (213) (112) (125)
Pro-forma information: 2008 by quarter (unaudited)[3]
Q1 2008 Q2 2008 Q3 2008 Q4 2008
$ million PRO-FORMA PRO-FORMA PRO-FORMA PRO-FORMA
Income Statement
NET SALES 862 966 1003 746
OPERATING INCOME/(LOSS) ADJUSTED[1]
for: (96) (69) (34) (98)
- amortization of acquisition-related
intangibles (25) (25) (25) (25)
- restructuring charges 0 0 0 (4)
OPERATING INCOME / (LOSS) as reported (121) (94) (59) (127)
NET INCOME / (LOSS) NA NA NA NA
Footnotes
[1] The adjusted operating loss is defined as the operating 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 cash is defined as cash and cash equivalents, marketable securities,
short term deposits less total debt
[3] The unaudited pro-forma results are presented as if the ST-Ericsson joint
venture had been created on January 1, 2008 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
2nd, 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, 2008.
Notes to editors
ST-Ericsson invites analysts and investors to a conference call scheduled on
January 22 at 1:00 p.m. CET/7 a.m. US Eastern Time. Call-in numbers, a live
webcast of the conference call as well as supporting slides will be available
athttp://www.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 pro-forma sales of about $2.7 billion in 2009. 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. More information about ST-Ericsson is available
atwww.stericsson.com <http://www.stericsson.com/>.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Global Communications & Media Relations Investor Relations
Claudia Levo, Geneva, Switzerland Fabrizio Rossini, Geneva, Switzerland
Jana Mancova, Geneva, Switzerland
Phone: +41 22 930 2733 Phone: +41 22 929 6973
Email:media.relations@stericsson.com Email: investor.relations@stericsson.
<mailto:media.relations@stericsson.com> com
<mailto:investor.relations@stericsson
.com>
Kristina Embring Klang, Lund, Sweden
Phone: +46 10 713 5058
Email:media.relations@stericsson.com
<mailto:media.relations@stericsson.com>
Ericsson Investor Relations STMicroelectronics Investor Relations
Susanne Andersson, Stockholm, Tait Sorensen, Phoenix AZ, US
Sweden
Phone: +46 10 719 4631 Phone: +1 602 485 2064
E-mail:investor.relations@ericsson. Celine Berthier, Geneva, Switzerland
com
<mailto:investor.relations@ericsson
.com>
Phone: +41 22 929 5812
Email:investors@st.com
<mailto: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#1375881]
