July 17, 2012 17:01 ET

ST-Ericsson Reports Second Quarter 2012 Financial Results

PLAN-LES-OUATES, SWEDEN--(Marketwire - Jul 17, 2012) -

* 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™ 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.

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


* 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™ 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.


* 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
                                                  June 30, 2012    December
 In $ million                                                      31, 2011


 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


 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

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

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.

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.

Second quarter 2012 financial results:

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that:

(i) the releases contained herein are protected by copyright and other applicable laws; and

(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: ST-Ericsson via Thomson Reuters ONE [HUG#1627442]

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