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Electronics Production | November 28, 2008

STM lowers 4Q revenue forecast

STMicroelectronics sees its 4Q revenue below the outlook provided in the Company’s statement from October 28, 2008. Based on current visibility, the Company now expects 4Qrevenues to be between $2.2 billion and $2.35 billion, as compared to $2.7 billion reported in 3Q, a sequential change in the range of about -12.8% to -18.4%.
The revised revenue outlook is the consequence of a recent slowdown in the billings, recent and substantial changes in customers’ demand and order push-outs for the month of December. This situation reflects the well-known weaknesses in the industry, across most geographies and market segments, and, in particular, in wireless, automotive, and computer peripherals.

The Company is reacting to the weaker-than-anticipated demand environment with a further reduction of manufacturing activity and reduced sourcing from third-party suppliers, compared to planned activities when entering the quarter. Primarily as a result of higher-than-anticipated unused capacity charges in the quarter, the gross margin expected for the fourth quarter 2008 is now about 38% plus or minus one percentage point.

Additionally, the Company continues to aggressively implement cost-control initiatives and is progressing in its accelerated effort to capture the cost synergies from the recent creation of ST-NXP Wireless.

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