STMicroelectronics Reports 2008 Third Quarter and Nine-Month Revenues and Earnings (Revenue up 11%)

 

At September 27, 2008, ST's cash and cash equivalents, marketable securities (current and non-current), short-term deposits and restricted cash equaled $2.14 billion. Total debt was $2.55 billion. ST's net financial position** was a net debt of $409 million. Shareholders' equity was $8.77 billion.

 

*Net operating cash flow is a non-US GAAP metric, which the Company's management utilizes as a measure of cash-generation capability. It is defined as net cash from operating activities ($414 million in the third quarter of 2008) minus net cash used in investing activities (-$1,664 million in the third quarter of 2008) excluding payments for purchase of and proceeds from the sale of marketable securities ($127 million in the third quarter of 2008), proceeds from matured short-term deposits and restricted cash.

 

**Net financial position is a non-US GAAP metric used by the Company's management to help assess financial flexibility. It is defined as cash and cash equivalents, marketable securities (current and non-current), short-term deposits and restricted cash ($2,141 million) minus total debt (current portion of long-term debt $63 million plus long-term debt $2,487 million).

 

"Thanks to our systematic ability to generate operating cash flow and our solid capital structure we have been able to advance our strategic initiatives independent of the uncertainties in the financial markets. During 2008 these strengths have enabled ST to complete the deconsolidation of Numonyx, fund $1.7 billion of acquisitions, maintain a solid credit rating, pay increased cash dividends and initiate a share buyback program, all while increasing our return on invested capital" said Mr. Bozotti.

 

Net Revenues by Market Segment for Q3 2008

The following table estimates, within a variance of 5% to 10% in the absolute dollar amount, the relative weighting of each of the Company's target market segments for the 2008 third quarter. For comparison purposes, the table incorporates the effect of the former NXP Wireless business since August 2, 2008.

 

 

    As % of Net Revenues         Q3 2008            Q3 2008
    Market Segment             ST excluding        ST including
                               NXP Wireless        NXP Wireless

    Automotive                      15%                 13%
    Consumer                        17%                 16%
    Computer                        17%                 15%
    Telecom                         34%                 40%
    Industrial & Other              17%                 16%

 

In comparison to the year-ago quarter, all market segments posted growth, led by Telecom which increased 16% (50% including NXP Wireless), Industrial which increased 19%, followed by Consumer, Computer and Automotive, which increased approximately 8%, 5% and 1%, respectively.

 

Sequentially, performance was led by Telecom which increased 8% (39% including NXP Wireless) and Computer by 8%. Consumer was up 2%, while Industrial and Automotive declined by 1% and 8%, respectively, from the prior quarter.

 

Financial and Operating Data by Product Segment for Q3 2008

 

Starting August 2, 2008, following the addition of the wireless business from NXP, the Company introduced a new product segment to report the sales and operating results of the newly created "Wireless Product Sector," which includes ST's wireless business for the full quarter and the results of the joint venture created with NXP since August 2, 2008. The results of ST's wireless business were previously included in the Application Specific Groups (ASG) segment, which has been revised to reflect the change. The newly created ACCI (Automotive, Consumer, Computer and Telecom Infrastructure) Product Groups segment includes the former ASG segment less the ST wireless business contributed to the ST-NXP Wireless joint venture.

 

    --  ACCI (Automotive, Consumer, Computer and Telecom Infrastructure Product
        Groups)
    --  IMS (Industrial & Multisegment Product Sector)
    --  WPS (Wireless Product Sector)

 

 

The following table provides a breakdown of revenues and operating income by product segment.

 

 

    In Million US$ and %                         Q3 2008
                                                            Operating
    Product Segment                  Net      % of Net        income
                                   Revenues    Revenues       (loss)

    ACCI (Auto/Cons./Comp./Telecom
     Infra. Product Groups) (a)     $1,085        40.2%         $58
    IMS (Industrial and
     Multisegment Product
     Sector)                           901        33.4          152
    WPS (Wireless Product
     Sector)                           696        25.9           22
    Others (b) (c)                      14         0.5         (177)

    TOTAL                           $2,696         100%         $55

    (a) ACCI is the former ASG (Application Specific Groups) less the ST
        wireless business contributed to the ST-NXP joint venture.
    (b) Net revenues of "Others" include revenues from sales of Subsystems and
        other revenues.
    (c) Operating income (loss) of "Others" includes items such as impairment,
        restructuring  charges,  and  other  related  closure  costs,  start-up
                costs,  and  other  unallocated  expenses  such  as:  strategic  or  special
                research  and  development  programs,  acquired  in-process  R&D  and
                other  purchase  accounting  impacts,  certain  corporate-level  operating
                expenses,  patent  claims  and  litigations,  and  the  other  costs  that  are
                not  allocated  to  product  groups,  as  well  as  operating  earnings  or
                losses  of  the  Subsystems  and  Other  Products  Group.  The  third  quarter
                2008  "Others"  include  a  $133  million  charge  due  to  purchase  accounting
                items  and  $22  million  of  impairment  and  restructuring  charges.
 

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