STMicro posts 3rd-quarter loss as Asian demand sputters

Reuters

By Leila Abboud

Oct 22 (Reuters) - STMicroelectronics NV posted aquarterly net loss after demand weakened from Asian smartphoneand electronics makers, as Europe's largest maker ofsemiconductors grappled with strong competition in the mobilemarket.

The company, whose chips are used in cars, computers andmobile phones, reported quarterly net revenue of $2.01 billion,down from $2.17 billion in the year-ago quarter.

Ahead of the results, Bernstein and JP Morgan analysts saidSTMicro could also be affected by the decline of smartphonemaker Blackberry, for which it produced chips for cameramodules. That may, in turn, weigh on current-quarter results.

The company said current-quarter revenue would be unchangedfrom the prior three months, plus or minus 3.5 percentagepoints.

"Blackberry might have canceled many models and STMicrosupplied them with camera modules but also possibly othercomponents such as MEMS" or motion sensors, JP Morgan analystswrote in a note.

Although STMicroelectronics exited its joint venture inmobile chips with Sweden's Ericsson in March, it still earnsabout a quarter of its revenue from chips for mobile gadgets.

It also lost a key contract for chips in Apple Inc's latest top-of-the-line iPhone 5S to Bosch, but theimpact from that isn't likely to appear until the next fewquarters, JP Morgan added.

ST Micro, which competes with Texas Instruments Inc,Qualcomm Inc and Samsung Electronics Co Ltd in chips, had a third-quarter net loss of $142 million, comparedwith a net loss of $478 million in the year-ago quarter.

Analysts on average had expected third-quarter revenue of$2.045 billion, according to Thomson Reuters I/B/E/S.

"We saw overall year-over-year revenue improvement of 3.9percent across our business outside of the Wireless productline," ST President and Chief Executive Carlo Bozotti said in astatement.

"On the other hand, this growth was milder than expected dueto a muted order pattern during the quarter, driven by softnessin high-end smartphones in Asia and the mass market in Asia,including the cable set-top box market in certain countries."

Bozotti, however, pointed out that automotive demandremained a bright spot for the company.

The stock price of STMicro has risen about 21 percent thisyear to close at 6.372 euros on Tuesday before earnings werepublished, giving it a market capitalization of about 5.93billion euros ($8.17 billion).

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