STMicroelectronics Updates 4Q08 Outlook

(Business News & Technology News, 1 Dec 2008)

STMicroelectronics recently announced that its revenue for the fourth quarter would be below the outlook provided in the company's news release dated October 28, 2008. Based on current visibility, the company now expects fourth quarter revenues to be between approximately $2.2 billion and $2.35 billion, as compared to $2.7 billion reported in the prior quarter, or a sequential change in the range of about -12.8 percent to -18.4 percent. The revised revenue outlook is the consequence of a recent slowdown in the billings, recent and substantial changes in customers' demand and order push-outs for the month of December. This situation reflects the well-known weaknesses in the industry, across most geographies and market segments, and, in particular, in wireless, automotive, and computer peripherals.

STMicroelectronics is reacting to the weaker-than-anticipated demand environment with a further reduction of manufacturing activity and reduced sourcing from third-party suppliers, compared to planned activities when entering the quarter. Primarily as a result of higher-than-anticipated unused capacity charges in the quarter, the gross margin expected for the fourth quarter 2008 is now about 38 percent plus or minus one percentage point.

Additionally, STMicroelectronics continues to aggressively implement cost-control initiatives and is progressing in its accelerated effort to capture the cost synergies from the recent creation of ST-NXP Wireless.

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