ST-Ericsson reports fourth quarter 2011 financial results

GENEVA, SWITZERLAND -- (MARKET WIRE) -- Jan 23, 2012 --


  * Net sales $409 million
  * Adjusted operating loss[1] $207  million
  * Key priorities for 2012: enhanced focus on execution and a clear
    roadmap to sustainable profitability

Geneva, Switzerland, January 23, 2012 - ST-Ericsson, a joint venture of STMicroelectronics (NYSE: STM) and Ericsson (NASDAQ: ERIC), reported financial results for the fourth fiscal quarter ending December 31, 2011.

Sales in the fourth quarter, excluding IP licensing to a third party, grew 1.3% over prior quarter. The operating loss reported for the fourth quarter was higher than the previous quarter.

Didier Lamouche, President and CEO, commented: "As the recently appointed CEO of ST-Ericsson, my aim, and that of the entire organization, will be to ensure that we meet all of our stakeholders' expectations. As we ramp up our new product portfolio and build a strong roadmap towards sustainable profitability, our focus is to effectively deliver on timely execution of our strategic programs and continue to proliferate design wins.

From a financial perspective, it is clear that both sales and operating results will continue to be challenging over the coming quarters, due to the reduction in the short term of new product sales with one of our largest customers. That is why our immediate priority is to build a strong roadmap to profitability based on enhancing execution, delivering in volume our leading products and lowering the break-even point."

2011 fourth quarter financial summary (unaudited)

 $ million                                         Q4 2011 Q3 2011 Q4 2010

 Income Statement

 NET SALES                                             409     412     577

 OPERATING INCOME/(LOSS) ADJUSTED[1] for:            (207)   (194)   (119)


 - amortization of acquisition-related intangibles    (25)    (25)    (28)

 - restructuring charges                               (9)     (5)    (24)

 OPERATING INCOME / (LOSS) as reported               (241)   (224)   (171)

 NET INCOME / (LOSS)                                 (231)   (211)   (177)
--------------------------------------------------------------------------


 $ million                                         Q4 2011 Q3 2011 Q4 2010

 Additional financial data
 Net Financial Position

 Cash, cash equivalents & short-term
  deposits/debt, net                                     2      20      68

 Parent companies short-term debt                     (800)   (614)   (150)

 Net financial position[2]()                          (798)   (594)    (82)

 Cash flow from operations                            (182)   (149)   (101)
---------------------------------------------------------------------------

Additional financial information

The net financial position[2]( )at the end of the fourth quarter was negative $798 million. The sequential decrease was mainly a consequence of the operating loss, partially mitigated by the reduction of working capital. Our shareholders will continue to support funding our transitional financial needs.

During the fourth quarter the company sold trade receivables without recourse, of which $144 million were outstanding at the end of the quarter, representing a sequential decline of $18 million.

Inventory decreased by $58 million reaching $223 million at the end of the fourth quarter.

Outlook

For the first quarter 2012, ST-Ericsson expects a very significant sequential decline in net sales, resulting from a combination of higher inventory at some of our customers, further weakening of legacy product sales, the effect of first quarter seasonality as well as the reduction, in the short term, of new product sales with one of our largest customers.

Highlights - products, technology and wins announced in fourth quarter 2011

* Products

* The ST-Ericsson Thor™ M7400 modem was selected as a Consumer Electronics Show Innovations 2012 Design and Engineering Awards honoree in the Embedded Technologies product category.

* Customers

* Sharp announced three new smartphones in Japan that are based on the ST- Ericsson Thor™ HSPA+ 21 Mbps thin modem.

* Nokia has selected the ST-Ericsson NovaThor™ platform for future devices it plans to introduce based on the Windows Phone mobile platform.

* The Motorola Atrix™ 2, launched in October, uses the ST-Ericsson Thor HSPA+ 21 Mbps thin modem.

* Partners/technology

* ST-Ericsson, in conjunction with STMicroelectronics, announced their involvement in the European VENTURI Project, a group of companies that will work together to develop mobile device platforms and applications that deliver fully-immersive mobile Augmented Reality experiences.

* ST-Ericsson and CEA-Leti, working with STMicroelectronics and Cadence Design Systems, have developed WIOMING, a three layer stack of multi- core system on chip (SoC) devices connected by the same network on chip (NoC). A proof of concept for a 3D multiprocessor architecture, the WIOMING 3D stack uses Wide I/Os to connect the SoC devices and a DRAM memory chip.

Financial results appendix (unaudited)

Annual financial results

                                                     2011   2010
 $ million                                         ACTUAL ACTUAL

 Income Statement

 NET SALES                                           1650   2293

 OPERATING INCOME/(LOSS) ADJUSTED[1] for:           (732)  (436)


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

 - restructuring charges                             (34)   (74)

 OPERATING INCOME / (LOSS) as reported              (867)  (611)

 NET INCOME / (LOSS)                                    (841)    (591)
----------------------------------------------------------------

2011  financial  results  by  quarter
  $  million                                                                    Q4  2011  Q3  2011  Q2  2011  Q1  2011

  Income  Statement

  NET  SALES                                                                            409          412          385          444

  OPERATING  INCOME/(LOSS)  ADJUSTED[1]  for:          (207)      (194)      (181)      (149)

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

  -  restructuring  charges                                                (9)          (5)        (15)          (4)

  OPERATING  INCOME  /  (LOSS)  as  reported                (241)      (224)      (222)      (178)

  NET  INCOME  /  (LOSS)                                                    (231)      (211)      (221)      (178)
---------------------------------------------------------------------------

Consolidated  balance  sheet

In  $  million                                                      December  31,  2011  December  31,  2010

  ASSETS

  Current  assets:

      Cash  and  cash  equivalents                                                        9                                68

      Trade  accounts  receivable,  net                                            97                              121

      Inventories,  net                                                                      223                              275

      Deferred  tax  assets                                                                    8                                11

      Other  receivables  and  assets                                              102                              125
                                                                              ------------------------------------
      Total  current  assets                                                              439                              600



      Goodwill                                                                                      745                              749

      Other  intangible  assets,  net                                              437                              524

      Property,  plant  and  equipment,  net                                  364                              424

      Long-term  deferred  tax  assets                                            188                              120

      Other  investments  and  other  non-current
      assets                                                                                            70                                81
                                                                              ------------------------------------
                                                                                                        1,804                          1,898

      Total  assets                                                                          2,243                          2,498
                                                                              ------------------------------------


  LIABILITIES  AND  SHAREHOLDERS'  EQUITY

  Current  liabilities:

      Short-term  borrowings  and  current
      portion  of  long-term  debt                                                    807                              150

      Trade  accounts  payable                                                          175                              241

      Other  payables  and  accrued  liabilities                          292                              274

      Deferred  tax  liabilities                                                          0                                  5

      Accrued  income  tax                                                                      8                                  4
                                                                              ------------------------------------
      Total  current  liabilities                                                1,282                              673



      Reserve  for  pension  and  termination
      indemnities                                                                                  87                                51

      Long-term  deferred  tax  liabilities                                      3                                  5

      Other  non-current  liabilities                                              25                                31
                                                                              ------------------------------------
                                                                                                            115                                88

      Total  liabilities                                                                1,397                              761



      Total  equity                                                                              846                          1,737
                                                                              ------------------------------------


      Total  equity  and  liabilities                                          2,243                          2,498
                                                                              ------------------------------------

---------------------------------------------------------------------------
 

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