ST-Ericsson reports net loss of USD 221 million for 2Q/2011

"The lower second quarter revenue was substantially in line with our expectations," said Gilles Delfassy, president and CEO of ST-Ericsson. "In the quarter we saw legacy product sales decline again sequentially contributing to a wider operating loss; however, we saw revenue from new products grow over the prior quarter, reaching about 45% of total sales. "Our high-speed Thor modem revenue grew more than 20% sequentially as new HSPA+ phones continued to ramp in the market. Also in the quarter we delivered first samples of our Thor M7400 LTE modem and conducted field trials on our NovaThor U8500 platform with several customers. We are very pleased with our increasing progress on the NovaThor U8500, although initial volumes will be somewhat lower due to reduced demand at certain customers. © ST-Ericsson "We continue to be encouraged by the traction we have with industry-leading customers on our new platforms; however, we are keenly aware of our current financial situation. As announced in June, we are taking additional actions aimed at reducing costs while not compromising the execution of our new products and delivery to customers. "While the present financial situation is very tough, we are on track to complete the transition to our new product portfolio in order to realize our aim of profitable leadership in this market." The net financial position at the end of the second quarter was negative USD 427 million. The sequential decrease was mainly due to the operating loss. During the second quarter the company sold trade receivables without recourse, of which USD 179 million were outstanding at the end of the quarter, representing a sequential increase of USD 31 million. Inventory decreased by USD 3 million, reaching USD 318 million at the end of the quarter. Outlook For the third quarter 2011, ST-Ericsson expects net sales to be about flat sequentially, reflecting increased revenue from new products offset by lower R&D services sales for advanced modem development and a continued decline in legacy product sales. Highlights - products, technology and wins announced in second quarter 2011 Products - Launched the Thor M5780 21Mbps, tailored for smartphones and 30 percent smaller compared to previous modem solutions. Customers - As of the end of first quarter, Ericsson had approximately 100 design wins for notebooks and netbooks and 25 design wins for tablets with modules using ST-Ericsson modems, with the majority based on the Thor M57xx 21Mbps family - Samsung selected the Thor M5720 modem to underpin the Samsung Infuse(TM) 4G smartphones launched with AT&T in the US - In June T-Mobile USA introduced the Samsung Exhibit(TM) 4G which is underpinned by ST-Ericsson's 21Mbps Thor modem - All new Panasonic Toughbook(TM) computers will feature Ericsson's mobile broadband module, based on the ST-Ericsson Thor 21Mbps modem.