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ST-Ericsson reports fourth quarter 2012 financial results


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© Marketwire 2013
2013-01-31 00:05:37 -

GENEVA, SWITZERLAND -- (Marketwire) -- 01/30/13 --



* Net sales $358 million, in line with outlook



* Adjusted operating loss(1)) $133 million, 55% improvement since Q1
2012



* NovaThor™ shipments grew 45% sequentially



Geneva, Switzerland, January 30, 2013 - ST-Ericsson, a joint venture
of
STMicroelectronics (NYSE: STM) and Ericsson (NASDAQ: ERIC), reported
financial
results for the fourth fiscal quarter ending December 31, 2012.



Sales in the fourth quarter were approximately flat sequentially, in line
with
the guidance provided, reflecting growing contribution from NovaThor
platform
shipments as well as $43 million revenues from IP licensing. NovaThor
ModAp
shipments grew by 45% sequentially to 10.7 million units.



Adjusted operating loss decreased to $133 million as a further result
of the
execution of the strategic plan announced in April. Since the first
quarter
2012 operating losses have been reduced by 55%, decreasing by $164 million.



Didier Lamouche, President and CEO, commented: "The fourth quarter was
again a
quarter of solid execution for us with revenues coming in as expected
and a
major growth of the shipments of our NovaThor platform, in part thanks
to the
new Samsung GALAXY S III mini. We have continued to execute
steadily and
aggressively on our strategy and delivered on our commitments to
improve our
financial results, further reducing our losses and controlling
expenses.
However, we recognize that the level of losses and use of cash remains
very
high."





Samples of ST-Ericsson's first LTE ModAp products became available in
December
and the first NovaThor L8580 ModAp platform based on
STMicroelectronics'
advanced 28nm FD-SOI process was demonstrated on January 7 at CES.



"We are also continuing to execute relentlessly against our committed
roadmap,"
continued Lamouche. "We have reached key maturity milestones with our
advanced
LTE modem which is in testing with customers and is anticipated
to be
commercialized as part of our NovaThor L8540 ModAp platform in 2013. As
promised
less than a year ago we also unveiled our newest chipset - the NovaThor
L8580
ModAp - which is the first product to use FD-SOI technology and is the
world's
fastest and lowest power integrated LTE modem and application
processor
platform, confirming the disruptive nature of FD-SOI technology."




2012 fourth quarter financial summary (unaudited)
 $ million                                         Q4 2012 Q3 2012 Q4 2011

  Income Statement*

 NET SALES                                             358     359     409

 OPERATING INCOME/(LOSS) ADJUSTED(1)) for:           (133)   (148)   (207)


 - amortization of acquisition-related intangibles    (19)    (19)    (25)

 - restructuring charges                              (17)     (7)     (9)

 OPERATING INCOME / (LOSS) as reported               (169)   (174)   (241)

 NON-GAAP NET INCOME /(LOSS)                          71**   (190)   (231)
--------------------------------------------------------------------------
* Please refer to footnote n. 4 on page 6
** Includes $1531 million gain from shareholders' debt forgiveness and
   $1060 million charges for impairment of goodwill and intangible assets


$ million                                         Q4 2012 Q3 2012 Q4 2011

 Additional financial data
 Net Financial Position

 Cash, cash equivalents &
  short-term deposits/debt, net                         37      39       9

 Parent companies short-term debt                        0   (1390)   (807)

 Net financial position 2)                              37   (1351)   (798)

 Net operating cash flow  3)                          (152)   (146)   (204)
---------------------------------------------------------------------------




Additional financial information



During the fourth quarter Ericsson and ST waived their credit of $1546
million
under the parents' loan.



Non-GAAP net income in the fourth quarter 2012 was $71 million, including
gain
from the debt forgiveness, impairment of intangible assets and write
off of
certain deferred tax assets.



The net financial position(2) )at the end of the fourth quarter was
positive $37
million, reflecting the cancellation of the parents' loan facility.



Inventory decreased by $33 million reaching $147 million at the end
of the
fourth quarter.
Net operating cash flow decreased slightly, reaching a negative $152
million.



The fourth quarter 2012 closing is based on a going concern assumption. In
the
month of December 2012 ST-Ericsson shareholders issued press releases about
their future intent with respect to ST-Ericsson. Following the uncertainty
resulting from these announcements we cannot exclude that the ST-Ericsson
Financial Statements could be further negatively affected by ST-Ericsson's
future scenario.



Outlook



For the first quarter 2013, ST-Ericsson expects a very significant
sequential
decline in net sales, mainly resulting, in addition to the first
quarter
seasonality, from a combination of no revenues from licensing expected
in the
quarter and further weakening of legacy product sales.




Highlights - Recent products, technology and wins
* Products
  * Samples of ST-Ericsson's first FD-SOI product became available in
    December and the NovaThor L8580 ModAp platform was announced on January
    7, 2013. The NovaThor L8580 ModAp is a multimode LTE-enabled integrated
    smartphone platform which features an eQuad-powered application
    processor running at up to 2.5Ghz and includes a full connectivity
    suite.
* Customers
  * Samsung GALAXY S III mini is powered by an ST-Ericsson NovaThor ModAp,
    making it the fourth Samsung smartphone using the NovaThor platform.
* Partners/technology
  * With the new NovaThor L8580 ModAp ST-Ericsson introduced eQuad
    technology. eQuad is a CPU architecture in which each processor core
    can operate as an industry-leading high performance core or a very
    low-power core for less computing-intensive tasks running at 0.6V.
    This is achieved by transistor-level electrical bias switching to allow
    each of two physical cores to run in two different modes, creating an
    electrically-enabled quad core. The eQuad processor delivers both the
    fastest processor speed at 2.5Ghz as well as by far the industry
    leading power efficiency with cores running at 1Ghz at only 0.65V.
  * ST-Ericsson tested and demonstrated its VoLTE (Voice over LTE)
    technology with key operators during the quarter. A white paper was
    published discussing VoLTE battery life and the benefits to be expected
    in upcoming modem generations such as ST-Ericsson solutions.
  * ST-Ericsson published a white paper on IMS Fusion. Through the
    invention of IMS Fusion, ST-Ericsson makes it possible for mobile
    devices to support an arbitrary number of downloaded or pre-installed
    IMS apps. This solves the problem of multiple IMS registrations without
    the need for a new modem API.
  * ST-Ericsson announced that it is ready to support Jolla's Sailfish OS
    in its NovaThor platforms.

Financial results appendix (unaudited)

Annual financial results
                                                    2012             2011
 $ million                                         ACTUAL           ACTUAL

 Income Statement *

 NET SALES                                           1351             1650

 OPERATING INCOME/(LOSS) ADJUSTED(1)) for:           (814)            (732)



 - amortization of acquisition-related intangibles    (75)            (101)

 - restructuring charges                              (89)             (34)

 OPERATING INCOME / (LOSS) as reported               (978)            (867)

 NON-GAAP NET INCOME / (LOSS)                        (749)**          (841)


--------------------------------------------------------------------------
2012  financial results by quarter
 $ million                                 Q4 2012 Q3 2012 Q2 2012 Q1 2012

 Income Statement *

 NET SALES                                     358     359     344     290

 OPERATING INCOME/(LOSS) ADJUSTED(1)) for:    (133)   (148)   (235)   (297)

 - amortization of acquisition-related
 intangibles                                   (19)    (19)    (19)    (19)

 - restructuring charges                       (17)     (7)    (56)    (10)

 OPERATING INCOME / (LOSS) as reported        (169)   (174)   (309)   (326)

 NON-GAAP NET INCOME / (LOSS)                  71**   (190)   (318)   (312)
---------------------------------------------------------------------------
* Please refer to footnote n. 4 on page 6
** Includes $1531 million gain from shareholders' debt forgiveness and
$1060 million charges for impairment of goodwill and intangible assets

Consolidated balance sheet *
 In $ million                        December 31, 2012 December 31, 2011


 ASSETS

   Current assets:

   Cash and cash equivalents                        37                9

   Trade accounts receivable, net                   35               97

   Inventories, net                                147              223

   Deferred tax assets                               1                8

   Other receivables and assets                     90              102
                                                  ---------------------
   Total current assets                            309              439



   Goodwill                                          0              745

   Other intangible assets, net                     12              437

   Property, plant and equipment, net              286              364

   Long-term deferred tax assets                     8              188

   Other investments and other non-current assets   44               70
                                                  ---------------------
                                                   349            1,804

   Total assets                                    659            2,243
                                                  ---------------------



 LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:

  Short-term borrowings and current
  portion of long-term debt                          0              807

  Trade accounts payable                           155              175

  Other payables and accrued
  liabilities                                      253              292

  Deferred tax liabilities                           0                0

  Accrued income tax                                 6                8
                                                  ---------------------
  Total current liabilities                        414            1,282


    Reserve for pension and
 termination indemnities                            85               87

    Long-term deferred tax
 liabilities                                         0                3

    Other non-current liabilities                   29               25
                                                  ---------------------
                                                   114              115

    Total liabilities                              528            1,397


    Total equity                                   131              846
                                                  ---------------------
    Total equity and liabilities                   659            2,243
                                                  ---------------------

  ------------------------------------------------
* Please refer to footnote n. 4 on page 6





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.



4) The fourth quarter 2012 closing is based on a going concern
assumption. The
valuation of several items in the financial report is based upon our
best
estimate using preliminary information available to us and under this
going
concern assumption. In the month of December 2012 ST-Ericsson'
shareholders
issued press releases about their future intent with respect to ST-
Ericsson, on
December 10(th) by STMicroelectronics and on December 20(th) by Ericsson.



Following the uncertainty resulting from these announcements, the
carrying
amounts of goodwill and intangible assets have been substantially
impaired. We
cannot exclude that the ST-Ericsson Financial Statements could be
further
negatively affected by ST-Ericsson's future scenario.



Notes to editors



ST-Ericsson invites journalists, analysts and investors to a conference
call
scheduled on January 31 at 5 p.m. 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 : 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. 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.stericsson.com



www.twitter.com/STEricssonForum : 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.



Forward looking statements contained in this press release and the fourth
quarter 2012 closing are based on a going concern assumption. In the month
of
December 2012 ST-Ericsson' shareholders issued press releases about their
future
intent with respect to ST-Ericsson, on December 10(th) by
STMicroelectronics and
on December 20(th) by Ericsson.
Please read this press release in conjunction with this information.



Fourth Quarter 2012 financial results:
hugin.info/1061/R/1674392/545192.pdf : hugin.info/1061/R/1674392/545192.pdf



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: Ericsson via Thomson Reuters ONE
[HUG#1674392]




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