Infineon's 3Q FY2008 Revenues Slightly Up 2% YoY

(Business News & Technology News, 28 Jul 2008)

Infineon Technologies AG's revenues in the third quarter fiscal year 2008 reached Euro1.029 billion, down 2 percent sequentially and up 2 percent year-over-year. The sequential decline reflects a decrease of revenues in the automotive, industrial and multimarket segment. However, excluding effects from currency fluctuations , primarily between the U.S. dollar and the Euro, and acquisitions and divestitures, revenues increased 1 percent sequentially and 6 percent year-over-year.

Infineon EBIT in the third quarter, which included a net gain of Euro41 million mainly in connection with the sale of the Hard Disk Drive (HDD) business to LSI, was Euro71 million, up from Euro36 million in the previous quarter. Infineon's third quarter EBIT also included Euro7 million for the amortization of acquisition-related intangible assets related mainly to the business acquired from LSI. Infineon EBIT in the second quarter included net charges of Euro8 million, and Euro5 million in amortization of such acquired intangible assets.

Net income from continuing operations for the third quarter was Euro45 million, resulting in basic and diluted earnings per share of Euro0.06. For the second quarter, net income from continuing operations was Euro19 million, and basic and diluted earnings per share were Euro0.03.

The net loss from discontinued operations was Euro637 million for the third quarter. This loss included Infineon's share in Qimonda's net loss, as well as charges of Euro411 million from the write-down of Qimonda to its estimated fair value less costs to sell. Basic and diluted loss per share from discontinued operations was Euro0.85.

For the third quarter, Infineon reported group net loss of Euro592 million, and basic and diluted loss per share of Euro0.79.

From March 31, 2008, the financial reports of Infineon focus on the ongoing operations of the company. As a result, the assets and liabilities of Qimonda have been reclassified as held for disposal in the condensed consolidated balance sheets, and the individual line items in the condensed consolidated statements of operations reflect the results of Infineon's segments excluding Qimonda. The results of operations of Qimonda are reported in one line item titled "Income (loss) from discontinued operations, net of tax". In addition, earnings per share as well as the statements of cash flows differentiate between "continuing" and "discontinued" operations.

For the fourth quarter of the 2008 fiscal year, Infineon expects revenues to increase by a mid single-digit percentage compared to the third quarter. However, the company notes that market risks in general are likely to rise and that the persistent weakness of the U.S. dollar against the Euro is adding to normal price declines in the company's markets. The company anticipates Infineon EBIT, excluding net gains or charges, to remain stable or decline slightly. Infineon EBIT in the fourth quarter will include temporarily increased costs, as shipments of DRAM wafers out of Infineon's 200-millimeter wafer facility in Dresden, Germany, to Qimonda came to an end in the third quarter. In connection with the company's IFX10+ cost-reduction program, the company expects to record significant net charges in the fourth quarter.

In the third quarter of the 2008 fiscal year, Infineon's revenues in the Communication Solutions segment were Euro313 million, up 4 percent compared to the prior quarter and up 21 percent YoY. Excluding the effects of currency fluctuations, primarily between the U.S. dollar and the Euro, and the contributions from the mobile phone business acquired from LSI and the DSL CPE activities acquired from Texas Instruments, segment revenues increased 8 percent sequentially and 9 percent year-over-year. Segment EBIT for the third quarter was negative Euro30 million, compared to negative Euro 29 million in the prior quarter. Despite the positive effect of the revenue increase, segment EBIT was held back by customization expenses relating to the ramp of new mobile phone platforms. Segment EBIT contained no significant net gains or charges in either quarter. Included in the segment EBIT for the third quarter was amortization of acquired intangible assets of Euro7 million relating mainly to the mobile phone business acquired from LSI, compared to Euro5 million for the second quarter.

In the wireless business, revenues increased compared to the second quarter, mainly due to the ramp-up of the HSDPA mobile phone platform. Results in the broadband business increased slightly, driven by the infrastructure business.

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