- Net sales $409 million
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Adjusted operating loss[1] $207 million
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Key priorities for 2012: enhanced focus on execution and a clear roadmap to sustainable profitability
Geneva, Switzerland, January 23, 2012 – ST-Ericsson, a joint venture of STMicroelectronics (NYSE:STM) and Ericsson (NASDAQ:ERIC, news, filings), reported financial results for the fourth fiscal quarter ending December 31, 2011.
Sales in the fourth quarter, excluding IP licensing to a third party, grew 1.3% over prior quarter. The operating loss reported for the fourth quarter was higher than the previous quarter.
Didier Lamouche, President and CEO, commented: “As the recently appointed CEO of ST-Ericsson, my aim, and that of the entire organization, will be to ensure that we meet all of our stakeholders’ expectations. As we ramp up our new product portfolio and build a strong roadmap towards sustainable profitability, our focus is to effectively deliver on timely execution of our strategic programs and continue to proliferate design wins.
From a financial perspective, it is clear that both sales and operating results will continue to be challenging over the coming quarters, due to the reduction in the short term of new product sales with one of our largest customers. That is why our immediate priority is to build a strong roadmap to profitability based on enhancing execution, delivering in volume our leading products and lowering the break-even point.”
2011 fourth quarter financial summary (unaudited)
| $ million | Q4 2011 | Q3 2011 | Q4 2010 |
| Income Statement | |||
| NET SALES | 409 | 412 | 577 |
| OPERATING INCOME/(LOSS) ADJUSTED[1] for: | (207) | (194) | (119) |
| – amortization of acquisition-related intangibles | (25) | (25) | (28) |
| – restructuring charges | (9) | (5) | (24) |
| OPERATING INCOME / (LOSS) as reported | (241) | (224) | (171) |
| NET INCOME / (LOSS) | (231) | (211) | (177) |
| $ million | Q4 2011 | Q3 2011 | Q4 2010 |
| Additional financial data Net Financial Position |
|||
| Cash, cash equivalents & short-term deposits/debt, net | 2 | 20 | 68 |
| Parent companies short-term debt | (800) | (614) | (150) |
| Net financial position[2]
Cash flow from operations |
(798)
(182) |
(594)
(149) |
(82)
(101) |
Additional financial information
The net financial position[2]at the end of the fourth quarter was negative $798 million. The sequential decrease was mainly a consequence of the operating loss, partially mitigated by the reduction of working capital. Our shareholders will continue to support funding our transitional financial needs.
During the fourth quarter the company sold trade receivables without recourse, of which $144 million were outstanding at the end of the quarter, representing a sequential decline of $18 million.
Inventory decreased by $58 million reaching $223 million at the end of the fourth quarter.
Outlook
For the first quarter 2012, ST-Ericsson expects a very significant sequential decline in net sales, resulting from a combination of higher inventory at some of our customers, further weakening of legacy product sales, the effect of first quarter seasonality as well as the reduction, in the short term, of new product sales with one of our largest customers.
Highlights – products, technology and wins announced in fourth quarter 2011
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Products
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The ST-Ericsson Thor(TM) M7400 modem was selected as a Consumer Electronics Show Innovations 2012 Design and Engineering Awards honoree in the Embedded Technologies product category.
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Customers
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Sharp announced three new smartphones in Japan that are based on the ST-Ericsson Thor(TM) HSPA+ 21 Mbps thin modem.
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Nokia has selected the ST-Ericsson NovaThor(TM) platform for future devices it plans to introduce based on the Windows Phone mobile platform.
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The Motorola Atrix(TM) 2, launched in October, uses the ST-Ericsson Thor HSPA+ 21 Mbps thin modem.
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Partners/technology
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ST-Ericsson, in conjunction with STMicroelectronics, announced their involvement in the European VENTURI Project, a group of companies that will work together to develop mobile device platforms and applications that deliver fully-immersive mobile Augmented Reality experiences.
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ST-Ericsson and CEA-Leti, working with STMicroelectronics and Cadence Design Systems, have developed WIOMING, a three layer stack of multi-core system on chip (SoC) devices connected by the same network on chip (NoC). A proof of concept for a 3D multiprocessor architecture, the WIOMING 3D stack uses Wide I/Os to connect the SoC devices and a DRAM memory chip.
Financial results appendix (unaudited)
Annual financial results
| $ million | 2011 ACTUAL |
2010 ACTUAL |
| Income Statement | ||
| NET SALES | 1650 | 2293 |
| OPERATING INCOME/(LOSS) ADJUSTED[1] for: | (732) | (436) |
| – amortization of acquisition-related intangibles | (101) | (101) |
| – restructuring charges | (34) | (74) |
| OPERATING INCOME / (LOSS) as reported | (867) | (611) |
| NET INCOME / (LOSS) | (841) | (591) |
2011 financial results by quarter
| $ million | Q4 2011 | Q3 2011 | Q2 2011 | Q1 2011 |
| Income Statement | ||||
| NET SALES | 409 | 412 | 385 | 444 |
| OPERATING INCOME/(LOSS) ADJUSTED[1] for: | (207) | (194) | (181) | (149) |
| – amortization of acquisition-related intangibles | (25) | (25) | (25) | (25) |
| – restructuring charges | (9) | (5) | (15) | (4) |
| OPERATING INCOME / (LOSS) as reported | (241) | (224) | (222) | (178) |
| NET INCOME / (LOSS) | (231) | (211) | (221) | (178) |
Consolidated balance sheet
| In $ million | December 31, 2011 | December 31, 2010 | |
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | 9 | 68 | |
| Trade accounts receivable, net | 97 | 121 | |
| Inventories, net | 223 | 275 | |
| Deferred tax assets | 8 | 11 | |
| Other receivables and assets | 102 | 125 | |
| Total current assets | 439 | 600 | |
| Goodwill | 745 | 749 | |
| Other intangible assets, net | 437 | 524 | |
| Property, plant and equipment, net | 364 | 424 | |
| Long-term deferred tax assets | 188 | 120 | |
| Other investments and other non-current assets | 70 | 81 | |
| 1,804 | 1,898 | ||
| Total assets | 2,243 | 2,498 | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||
| Current liabilities: | |||
| Short-term borrowings and current portion of long-term debt | 807 | 150 | |
| Trade accounts payable | 175 | 241 | |
| Other payables and accrued liabilities | 292 | 274 | |
| Deferred tax liabilities | 0 | 5 | |
| Accrued income tax | 8 | 4 | |
| Total current liabilities | 1,282 | 673 | |
| Reserve for pension and termination indemnities | 87 | 51 | |
| Long-term deferred tax liabilities | 3 | 5 | |
| Other non-current liabilities | 25 | 31 | |
| 115 | 88 | ||
| Total liabilities | 1,397 | 761 | |
| Total equity | 846 | 1,737 | |
| Total equity and liabilities | 2,243 | 2,498 | |
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.
Notes to editors
ST-Ericsson invites journalists, analysts and investors to a conference call scheduled on January 24 at 5pm 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
FOR FURTHER INFORMATION, PLEASE CONTACT:
| Global Communications & Media Relations Claudia Levo, Geneva, Switzerland |
Investor & Analyst Relations Fabrizio Rossini, Geneva, Switzerland Phone: +41 22 929 6973 Email: investor.relations@stericsson.com |
| Pamela McCracken, Santa Clara, U.S.A. Phone: +1 408 398 8565 Email: media.relations@stericsson.com |
|
| Ericsson Investor Relations Asa Konnbjer, Stockholm, Sweden Phone: +46 10 713 3928 E-mail: investor.relations@ericsson.com |
STMicroelectronics Investor Relations Tait Sorensen, Phoenix AZ, US Phone: +1 602 485 2064 Celine Berthier, Geneva, Switzerland |
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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.
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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.
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