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Electronics Production | October 27, 2004

ST continue to improve profitability

STMicroelectronics reported financial results for the third quarter and first nine months ended September 25, 2004. Third quarter revenues exceeded $2.2 billion, up 2.7% sequentially. Gross margin reached 37.9% for the third quarter, compared to 37.4% in the prior quarter. Third quarter operating income increased 19.1% sequentially to $213 million.
Net revenues for the third quarter were $2,231 million, up 2.7% sequentially from the $2,172 million reported in the prior quarter, and 23.7% above the $1,803 million of last year’s third quarter. Revenues from Application Specific Products were $1,163 million, or 52.1% of 2004 third quarter net revenues. Differentiated product revenues were $1,451 million, or 65.0% of net revenues for the period.

Pasquale Pistorio, President and Chief Executive Officer, commented, “ST continued to improve profitability levels in the third quarter. Despite a progressive decline in market demand that was characterized by shortened lead times and backlog adjustments, our revenues came in within the guidance parameters we provided at the time of our 2004 second quarter earnings announcement.”

“We share the view expressed by many analysts that the 2004 fourth quarter will be a period of relatively modest growth for the semiconductor industry, resulting from lower-than-anticipated growth in end-market demand which has caused inventory build-ups in certain market segments and has constrained pricing power. Within this environment,” Mr. Pistorio said.

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