STMicroelectronics Announces Fourth Quarter and Full Year 2011 Financial Results

STMicroelectronics (ST; New York Stock Exchange: STM) STM announced the fourth quarter and full year financial statements as of December 31, 2011.

Carlo Bozotti, president and chief executive officer of STMicroelectronics, said: “With the overall semiconductor market slowed down significantly in 2011, our wholly-owned company’s business continued to grow steadily and its revenue reached 8.2 billion. In US dollars, the operating profit rate is 11.4%."

“In addition, we were particularly proud of our strong growth in two key strategic products in 2011. Our MEMS sales have nearly doubled and exceeded US$600 million. Revenue from automotive sales increased by more than 40 in 2010 On the basis of %, it reached a record high again in 2011, with an increase of 18%, while the increase in sales revenue also resulted in a substantial increase in operating profits of these two divisions.

“We continued to maintain a solid financial position while paying close attention to capital management. After adjusting to non-US GAAP measures, as of the end of the year, ST-Ericsson’s debt, which includes 50% of our equity, had total financial resources of US$2.3 billion. The net financial position was approximately US$1.17 billion. The inventory level and inventory turnover in the fourth quarter improved as expected and capital expenditures returned to normal as planned.”

“Because our joint venture ST-Ericsson in the wireless business is in the transition and transformation period of new and old products, the challenges we face exceed our expectations. The most important factor is that many major customers are undergoing major business restructuring and change plans. The product mix has already begun mass production, but ST-Ericsson's current financial performance is still far behind our expectations. Therefore, ST-Ericsson is currently at a critical stage in the company's development and needs to focus on improving the execution of the company's policy plan. We will reduce our balance of payments and review company development plans to achieve sustainable profitability. We believe ST-Ericsson's new CEO is the best person to lead the company in achieving this goal."

In the fourth quarter of 2011, STMicroelectronics reviewed its fourth-quarter net income in the fourth quarter of 2011 by a decrease of 10.3%, which was in line with our expectation. All regions experienced different degrees of decline from the previous quarter. The Americas decreased by 4.6%, Japan and South Korea and Greater China and South Asia decreased by approximately 7.5%, and Europe, Middle East and Africa (EMEA) decreased by 20.7%. In the fourth quarter of 2011, STMicroelectronics' net revenue decreased by 22.6% year-on-year, with analog products, MEMS and microcontrollers (AMMs) and automotive electronics, consumer electronics, computer and telecommunications infrastructure (ACCI) outperforming other divisions. Automotive electronics performed best, and wireless business performed less than expected.

The gross profit margin decreased by 240 basis points as expected, mainly due to the decrease in output. Reduced inventory levels result in insufficient wafer production capacity. Compared with the same period of last year, the decrease in wafer fab production and related idle capacity expenditure resulted in a 650 basis point decrease in gross profit margin.

In the fourth quarter, expenses for SG&A and R&D expenditure totaled US$894 million, roughly the same as the previous quarter. From a year-on-year perspective, due to the reorganization of ST-Ericsson's business and other factors, the total amount of the two expenses decreased by US$20 million. In the fourth quarter of 2011, total operating expenses accounted for 40.8% of sales revenue, compared with 36.8% in the previous quarter and 32.3% in the same period of last year.

Affected by the market environment, the decline in output and the imperfect production capacity led to the fact that the operating profit margin before the restructuring of STMicroelectronics in the fourth quarter of 2011 was close to the balance of payments, compared with 4.3% in the previous quarter and 12.4% in the same period of last year. . *

Fourth-quarter income tax includes a $92 million Valuation Allowance related to ST-Ericsson’s cumulative net operating loss. Since this valuation allowance expense has nothing to do with STMicroelectronics' investment in ST-Ericsson, minority equity increased by US$92 million and ST’s consolidated income statement is not affected. Without this pricing allowance, ST’s fourth-quarter tax rate would be 15%.

In the fourth quarter of 2011, the company had a net loss of US$11 million, a diluted net loss of US$0.01 per share, and a diluted net income of US$0.08 and US$0.24 per share in the previous quarter and the fourth quarter of 2010, respectively. After adjustment, after deducting related taxes, the diluted net loss per share for the fourth quarter was US$ 0.01, and the diluted net income per share for the previous quarter and the fourth quarter of 2010 was US$ 0.09 and US$ 0.27, respectively. *

In the fourth quarter of 2011, the effective average exchange rate of the company was approximately US$1.36 to EUR1.00, in the third quarter of 2011 it was US$1.40 to EUR1.00, and in the fourth quarter of 2010 it was US$1.34 to EUR1.00.