) reported adjusted fourth quarter 2012 loss of 11 cents per
share, wider than the Zacks Consensus Estimate of 9 cents loss
per share on lower volumes and lower gross margins.
STMicro reported revenues of $2.16 billion in the fourth
quarter, down 1.3% from the year-ago period. However, reported
revenues were above the mid-point of management's expected range
due to ramp of new products.
Revenues by Product Segment
Automotive (APG) segment
generated 17% of fourth quarter revenues. Segment revenue
decreased 6.0% sequentially, mainly due to weak market
Analog, MEMS & Microcontrollers (AMM)
generated 40% of fourth quarter sales. Segment revenue increased
7.4% sequentially driven by higher demand for MEMS, secure
microcontrollers and analog applications.
accounted for 14.8% of sales, which was down 1.7% sequentially
due to weak demand for digital consumer products.
Power Discrete (PDP) segment
accounted for 11.3% of sales. Segment revenue decreased 11.0%
sequentially due to weak market demand.
accounted for 16.2% of sales. Wireless includes the portion of
sales and operating results of ST-Ericsson as well as other items
affecting operating results related to the wireless business.
Segment revenue decreased 2.2% sequentially. Revenue results
reflected ST-Ericsson's continued ramp of NovaThor platforms as
well as $43 million from IP licensing, which was more than offset
by the decrease in legacy products sales.
accounted for 0.7% of sales and was down 16.7% sequentially.
Reported gross margin for the quarter was 32.2%, down 120
basis points (bps) from 33.4% in the comparable year-ago quarter
due to negative price effect and lower volumes, partially offset
by a favorable product mix.
STMicro reported operating expenses of $876.0 million, down
2.0% from $894.0 million incurred in the year-ago quarter.
However, GAAP operating loss was 33.8% compared with a loss of
6.0% in the year-ago quarter. Selling, general and administrative
costs, were up as a percentage of sales from the year-ago
quarter, while research and development (R&D) expenses
On a fully diluted GAAP basis, STMicro recorded a net loss of
$428 million or 48 cents per share compared with a loss of $11
million or 1 cent per share in the year-ago quarter.
STMicro reported adjusted net loss of $96 million compared
with a loss of 8 million in the year-ago quarter. Pro forma loss
per share came in at 11 cents, compared with a loss of 1 cent in
the year-ago quarter.
Balance Sheet & Cash Flow
STMicro exited the fourth quarter with cash, cash equivalents
and short-term deposits and marketable securities of
approximately $2.48 billion versus $1.92 billion in the prior
quarter. Trade receivables were $1.0 billion, flat
Cash flow from operations was $252 million, up from $148
million in the prior quarter. Capex was $78 million versus $203
million in the prior quarter. The company paid a total dividend
of $89 million in the quarter.
During the fourth quarter, STMicro and
) waived their loan to ST-Ericsson (a joint venture between
STMicro and Ericsson) for an amount of $1,546 million. As a
consequence, the Ericsson portion of $773 million was recorded as
a contribution from non-controlling interest and reduced the
company's consolidated debt.
In the fourth quarter, the company drew an €350 million multi
currency 8 year credit facility granted by the European
Investment Bank in 2010 to support its R&D programs in
Europe. The proceeds will strengthen the company's financial
flexibility going forward.
For the first quarter of 2013, STMicro expects total revenue
to decrease 7.0% (+/- 3.5 percentage points) sequentially. Gross
margin is expected to be about 31.4% (+/-2 percentage points), to
reflect the lower unsaturation charges and no revenues from
licensing compared to the fourth quarter.
STMicro is a semiconductor company, which engages in design,
development, marketing, and manufacture of semiconductor
integrated circuits and discrete devices. The company delivered a
weak fourth quarter. The reported loss was wider than the Zacks
However, we are impressed by the company's new strategic plan,
which states that the company would exit its investment in
ST-Ericsson after a transition period. STMicro's focus to improve
its market position in wireless through its leading product
portfolio is quite encouraging. The improvement in the AMM
segment, introduction of several major products, and new design
wins during the quarter will lead to fast recovery in the coming
However, lack of visibility and macro uncertainty may keep the
share price range bound in the near term. Over the long term,
STMicro is well positioned for growth and is gaining share in its
key served markets.
Currently, STMicroelectronics has a Zacks Rank #3 (Hold).
Investors should look out for some other stocks with positive
Zacks Rankand Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
), a Zacks Rank #2 (Buy) with an ESP of +350.0%.
Geospace Tec. Corp.
), a Zacks Rank #2 (Buy) with an ESP of +16.95%.
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