GENEVA, Oct. 28 /PRNewswire/ -- -- Third quarter net revenues increased 2.7% sequentially and 10.9% year-over-year to $2.46 billion excluding NXP Wireless and Flash Memory Group (FMG)
-- Gross margin was 37.2% before NXP Wireless integration
GENEVA, Oct. 28 /PRNewswire-FirstCall/ -- STMicroelectronics (NYSE: STM) reported financial results for the 2008 third quarter and nine months ended September 27, 2008.
ST completed the deconsolidation of its FMG segment and took an equity interest in Numonyx on March 30, 2008, with an anticipated one quarter lag in reporting.
ST-NXP Wireless, a joint venture owned 80% by ST, began operations on August 2, 2008 and is fully consolidated into ST's operating results. The third quarter 2008 financial review includes the ST-NXP Wireless joint venture except where noted.
The third quarter 2008 reported financial statements include several non-recurring items in connection with the above transactions. In addition, some of the actual results are reported at constant business perimeter for comparability purposes to prior quarter and to Q3 2008 guidance. For this purpose, this press release includes below certain adjustments to reported numbers. Please refer to the reported results (Revenues of $2,696 million and Net Loss of $289 million) in the enclosed Financial Statements and described in detail on pages 3 and 4 of this press release.
Third Quarter 2008 Financial Review
Summary Financial Highlights Before Inclusion of NXP Wireless:
In Million US$ and % Q3 2008 Q2 2008 Q3 2007 ex FMG -------------------- ------- ------- -------------- Net Revenues 2,455 2,391 2,213 Gross Profit 913 880 865 Gross Margin 37.2% 36.8% 39.1% Effective Exchange Rate $/euro (a) 1.54 1.55 1.36 (a) The Company's effective exchange rate reflects actual exchange rate levels combined with the impact of hedging programs.
ST's net revenues for the third quarter increased 2.7% sequentially driven by high single-digit growth in Computer and Telecom but mitigated by a high single-digit decrease in Automotive reflecting the significant downturn in the automotive industry as a whole. On a year-over-year basis, ST's net revenues grew 10.9% before including revenue from NXP Wireless, led by 16% and 19% gains in Telecom and Industrial, respectively, and was well-supported by mid- to high single digit growth in Computer and Consumer.
Gross margin in the third quarter of 2008, before the positive effect of the wireless addition and the adverse impact of purchase accounting adjustments, improved to 37.2% from 36.8% in the prior quarter with minimal currency effect. The quarter-to-quarter gross margin improvement was due to an enhanced product mix and manufacturing efficiencies. In the third quarter of 2007, gross margin was 35.2%, or 39.1% excluding FMG. The Company estimates that year-over-year currency changes negatively impacted the Q3 2008 gross margin of 37.2% by approximately 250 basis points.
Summary Financial Highlights Including NXP Contribution to Wireless JV:
In Million US$ and % Q3 2008 Q2 2008 Q3 2007 ex FMG ------------------ ------- ------- -------------- Net Revenues 2,696 2,391 2,213 Gross Profit (a) 1,016 880 865 Gross Margin(a) 37.7% 36.8% 39.1% Effective Exchange Rate $/euro 1.54 1.55 1.36 (a) Third quarter 2008 excludes the one-time, non-cash $57 million purchase accounting adjustment related to the inventory step-up of the former NXP Wireless business.
President and CEO Carlo Bozotti commented, "The third quarter reflected continued focus on both our operating and strategic initiatives. From a financial perspective, our third quarter performance demonstrated further progress in strengthening our market position, building on the results of the first half of this year. Before including the additional revenue from the recently created ST-NXP Wireless joint venture, net revenues increased 12.4% year-to-date.
"We are gaining share overall, in particular in our areas of focus: multimedia convergence applications and power solutions. Indeed, we continued to harvest the benefits of our sales expansion initiatives and we increased our sales to new target key accounts by 16.0% on a sequential basis.
"We continue to build scale in the critical area of wireless applications with our joint announcement in August with Ericsson to form a joint venture composed of Ericsson Mobile Platforms and ST-NXP Wireless. We believe this new leader will have the industry's strongest product offering in semiconductors and platforms for mobile applications and will be well positioned to continue and extend customer relationships with the most innovative players in the wireless industry."
Summary Financial Highlights - As reported
In Million US$ and % Q3 2008 Q2 2008 Q3 2007 -------------------- ------- ------- ------- Net Revenues 2,696 2,391 2,565 Gross Profit 959 880 902 Gross Margin 35.6% 36.8% 35.2%