TMCnet News
STMicroelectronics Reports 2014 Second Quarter and First Half Financial Results [Global Data Point](Global Data Point Via Acquire Media NewsEdge) Second quarter net revenues totaled $1.86 billion and gross margin was 34.0%. Net income was $38 million and included Nano2017 R%7ED program funding. "During the second quarter we made positive business and financial progress in key areas: from revenue and gross margin improvement as a result of our product, marketing and manufacturing initiatives, to a further strengthened capital structure," commented ST President and CEO Carlo Bozotti. "Our performance benefited from the combination of favorable macro-economic and market dynamics, especially in Industrial and Automotive, and from the traction of our innovative portfolio and mass-market initiatives. In our Sense %7E Power and Automotive segment, both Industrial %7E Power Discrete and Automotive delivered sequential growth and strong operating margin improvements. In total, SP%7EA's operating margin reached double-digits. In our Embedded Processing Solutions segment, our leadership in microcontrollers continues to be a key driver of improvement as our general-purpose microcontroller business enjoyed its fifth consecutive quarter of record revenues. Also, as anticipated, our digital consumer and ASIC business started to grow sequentially after reaching an inflection point in the first quarter. "To strengthen our capital structure and significantly enhance our financial flexibility, we took advantage of very favorable terms and raised $1 billion in July through a convertible bond offering. Proceeds from the issuance of the bonds will be used for general corporate purposes to boost growth. Additionally, by strengthening our capital structure we reinforce our objective to return capital to shareholders through dividends." Second Quarter Review ST's second quarter net revenues increased 2.1% on a sequential basis to $1.86 billion and excluding legacy ST-Ericsson products and one-time licensing, increased by 4.7%. By region of shipment, sequential growth was led by EMEA with an 8.3% increase driven by automotive and industrial customers while Greater China %7E South Asia increased 2.0%. The Americas decreased by 0.7%. Japan %7E Korea was lower by 5.3%, reflecting lower sales of legacy ST Ericsson products. On a year-over-year basis, net revenues decreased 8.9% mainly due to the phase-out of legacy ST-Ericsson products. Second quarter gross profit was $634 million and gross margin was 34.0%, 40 basis points above the midpoint of ST's outlook range. Gross margin improved 120 basis points sequentially, mostly reflecting manufacturing efficiencies and favorable product mix. On a year-over-year basis, gross margin improved 120 basis points. Combined R%7ED and SG%7EA expenses totaled $626 million compared to $606 million in the first quarter and $738 million in the year-ago quarter. In the second quarter, R%7ED expenses were $389 million and SG%7EA expenses were $237 million, representing a sequential increase of 3% and 5%, respectively, principally due to a longer calendar. R%7ED and SG%7EA expenses declined by 14% and 17%, respectively, compared to the year-ago period, mainly due to the ST-Ericsson wind-down and cost-reduction initiatives. Other income and expenses, net in the second quarter, significantly increased to $110 million, compared to $15 million and $2 million in the first and year-ago quarter, respectively. The second quarter of 2014 included $100 million related to the catch-up of funding of the Nano2017 R%7ED program which started January 1, 2013. The Nano2017 program was approved by the European Union in the second quarter of 2014 and ST, in its role as Coordinator and Project Leader of Nano2017, has been allocated an overall funding budget of about €400 million for the period 2013-2017, subject to the conclusion of agreements every year with the public authorities and linked to the achievement of technical parameters and objectives. Impairment, restructuring and other related closure costs for the second quarter were $20 million compared to $12 million in the prior quarter. Operating margin before impairment and restructuring was a positive 6.3% in the 2014 second quarter compared to a positive 0.4% in the prior quarter. Loss on equity investments in the second quarter was $52 million, mostly related to ST's investment in the 3Sun joint venture. In particular, the second quarter includes impairment and other charges in connection with ST's decision to exit the joint venture. ST has signed an agreement yesterday, whereby the company will transfer all 3Sun ownership and obligations to Enel Green Power. Second quarter net income was $38 million or $0.04 per share, compared to a net loss of $(0.03) and $(0.17) per share in the prior and year-ago quarter, respectively. On an adjusted basis, net of related taxes, ST reported non-U.S. GAAP net income per share of $0.11 in the second quarter, excluding impairment and restructuring charges and one-time items, compared to a net loss of $(0.01) and $(0.06) per share in the prior and year-ago quarter, respectively. For the second quarter of 2014, the effective average exchange rate for the Company was approximately $1.36 to €1.00 compared to $1.35 to €1.00 for the first quarter of 2014 and $1.30 to €1.00 for the second quarter of 2013. (c) 2014 GlobalData Provided by SyndiGate Media Inc. (Syndigate.info). |