* Net sales $344 million; 19 percent sequential increase
* Adjusted operating loss(1)) $235 million; $62 million improvement over prior
quarter
* Transfer of application processor development organization finalized on July
1
Geneva, Switzerland, July 17, 2012 - ST-Ericsson, a joint venture of
STMicroelectronics (NYSE:STM) and Ericsson (NASDAQ:ERIC), reported financial
results for the second fiscal quarter ending June 30, 2012.
Sales in the second quarter increased 19 percent over the prior quarter
reflecting a significant ramp of volumes of NovaThor(TM) platforms shipping to
our major customers. Adjusted operating loss decreased sequentially by $62
million to $235 million, as the result of volume and margin improvements due to
new platforms and the first steps of the ongoing actions to reduce operating
expenses.
Didier Lamouche, President and CEO of ST-Ericsson said: "This has been a quarter
of progress across the board. We ramped our NovaThor ModAp platform with Samsung
and Sony Mobile Communications and also added several new Chinese key players.
We are executing in a timely manner our new strategic plan to reposition our
whole business model and we finalized on July 1, as anticipated, the transfer of
the application processors development team to STMicroelectronics to build a
world class partnership.
We are advancing towards our objective to reduce our breakeven point and to
reach sustainable profitability. During the quarter, all profit and loss metrics
showed a sequential improvement: from revenue growth to gross margin expansion
and from expense reduction to the decrease of our operating loss. While these
indicators are encouraging, we recognize that further improvements in the
execution of our critical programs are needed. Moreover, we operate in a very
dynamic, fast-changing market and a highly competitive environment. In this
context our primary focus is on delivering improvements of operating results and
cash flow."
2012 second quarter financial summary (unaudited)
$ million Q2 2012 Q1 2012 Q2 2011
Income Statement
NET SALES 344 290 385
OPERATING INCOME/(LOSS) ADJUSTED(1)) for: (235) (297) (181)
- amortization of acquisition-related intangibles (19) (19) (25)
- restructuring charges (56) (10) (15)
OPERATING INCOME / (LOSS) as reported (309) (326) (222)
NET INCOME / (LOSS) (318) (312) (221)
--------------------------------------------------------------------------
$ million Q2 2012 Q1 2012 Q2 2011
Additional financial data
Net financial position (2))
Cash, cash equivalents & short-term
deposits/debt, net 33 22 18
Parent companies short-term debt (1238) (978) (445)
Net financial position (1205) (956) (427)
Net operating cash flow(3)) (249) (159) (233)
-------------------------------------------------------------------------------
Additional financial information
The net financial position(2) )at the end of the second quarter was negative
$1205 million.
Inventory decreased by $38 million reaching $171 million at the end of the
second quarter.
Outlook
Given, on one hand, the very substantial revenue growth during the second
quarter and, on the other hand, the macro-economic and industry environment, ST-
Ericsson expects net sales to be approximately flat sequentially for the third
quarter 2012.
Highlights - products, technology and wins announced in the second quarter 2012
* Customers
* Samsung continues to incorporate the ST-Ericsson NovaThor ModAp
platforms into their award-winning Samsung GALAXY smartphone line with
the announcement of the Samsung GALAXY Beam and Samsung GALAXY Ace 2.
* China Unicom and Yulong are now customers of the NovaThor platform. The
NovaThor U8500 ModAp platform powers the new Coolpad Cheer CP7728.
* The Xperia(TM) go smartphone became the fourth phone this year from Sony
Mobile Communications to leverage the ST-Ericsson NovaThor platform.
* The Shanda Bambook smartphone - the first from the China-based company -
is powered by the ST-Ericsson NovaThor U8500 ModAp solution. It is the
first of several smartphones planned by Shanda to use the ST-Ericsson
NovaThor platform.
* Two new Panasonic ELUGA devices for the Japanese market are powered by
the compact yet power efficient Thor M5780 thin modem.
* A new Sharp AQUOS smartphone is based on the power efficient ST-Ericsson
Thor M5730 and available now in Japan.
* Partners/technology
* STMicroelectronics secured additional sourcing for 28nm and 20nm FD-SOI
Technology with GLOBALFOUNDRIES. ST-Ericsson selected ST FD-SOI
technology for use in its future mobile platforms, which will enable
enhanced performance from the ST-Ericsson NovaThor platform with much
less battery usage.
Financial results appendix (unaudited)
Consolidated Balance sheet
In $ million June 30, 2012 December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents 33 9
Trade accounts receivable, net 50 97
Inventories, net 171 223
Deferred tax assets 10 8
Other receivables and assets 113 102
-------------------
Total current assets 377 439
Goodwill 742 745
Other intangible assets, net 378 437
Property, plant and equipment, net 316 364
Long-term deferred tax assets 218 188
Other investments and other non-current assets 26 70
-------------------
1,681 1,804
Total assets 2,058 2,243
-------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt 1,238 807
Trade accounts payable 176 175
Other payables and accrued liabilities 296 292
Deferred tax liabilities 0 0
Accrued income tax 7 8
-------------------
Total current liabilities 1,718 1,282
Reserve for pension and termination indemnities 94 87
Long-term deferred tax liabilities 4 3
Other non-current liabilities 25 25
-------------------
123 115
Total liabilities 1,841 1,397
Total equity 217 846
-------------------
Total liabilities and equity 2,058 2,243
-------------------
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) Net operating cash flow is defined as net cash from operating activities,
less capital expenditure and less restructuring charges.
Notes to editors
ST-Ericsson invites journalists, analysts and investors to a conference call
scheduled on July 18 at 12:00 pm (CET). Call-in numbers, a live webcast of the
conference call, as well as supporting slides, will be available at
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 generated sales of $1.7 billion in
2011. 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 Investor & Analyst Relations
Relations Fabrizio Rossini, Geneva, Switzerland
Claudia Levo, Geneva, Switzerland Phone: +41 22 929 6973
Email: investor.relations@stericsson.com
Pamela McCracken, Santa Clara, U.S.A.
Phone: +1 408 919 8743
Email: media.relations@stericsson.com
Ericsson Investor Relations STMicroelectronics Investor Relations
Åsa Konnbjer, Stockholm, Sweden Tait Sorensen, Phoenix AZ, US
Phone: +46 10 713 3928 Phone: +1 602 485 2064
E-mail: Celine Berthier, Geneva, Switzerland
investor.relations@ericsson.com 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#1627450]
