Ericsson
OMX : ERIC
NASDAQ : ERIC

July 17, 2012 17:04 ET

ST-Ericsson reports second quarter 2012 financial results

GENEVA--(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

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.

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™ 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

                                                     June 30,  December 31,
 In $ million                                          2012        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



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: http://hugin.info/1061/R/1627450/520877.pdf



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(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: Ericsson via Thomson Reuters ONE

[HUG#1627450]

Contact Information

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