STMicroelectronics N.V. (STM)

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STMicroelectronics N.V. (STM)

Goldman Sachs Technology and Internet Conference 2013 Call

February 12, 2013 7:40 pm ET

Executives

Bob Krysiak – Executive Vice President and President, Americas Region

Tait Sorensen – Vice President of Investor Relations

Analysts

Simon Schafer – Goldman Sachs

Presentation

Simon Schafer – Goldman Sachs

STMicro fire side chat here at Goldman Sachs Tech & Internet Conference this year. I’m Simon Schafer. I cover the European semis and tech hardware industries at Goldman in London. Great pleasure to have STM at this conference. Again we’ve done this for a number of years. So thanks again for joining us.

We’ve got Bob Krysiak, EVP of the Americas at STM; and then Tait Sorensen, VP of Investor Relations as well. So thanks guys for doing this. What I thought we do is just talk a little bit about the environment. We’ve asked the number of your competitors this question this morning, and of course, the one thing that came through on the conference calls in Q4 earnings season just a couple of weeks back is I guess a number of your peers including ST actually commenting about someone improves order trends really coming into the year. And actually your staff is also you guys have giving somewhat better guidance than its seasonally normal, but may be just remind us as to what your latest guidance is and how are you shaping up into the first and second quarter?

Bob Krysiak

Yes. So again obviously we had a good Q4. 2012 announcements were out decline versus 2011. We guided midpoint sequentially to Q1 to minus 3% and I think we were actually I mean even a big debate inside the company. This was slightly above seasonal for us, typically because you lose. In Asia you lose 7% just in days of manufacturing, which is a big manufacturing base for us. And of course the usual seasonal challenges, so actually the guidance for us was pretty good it was well received. We saw orders uptick in January Carlo was quite comfortable about backlog that we have.

He is putting pressure on us to do more. There is always, but, it’s pretty good, we’re quite comfortable with it. Some customers were obviously we’re seeing this kind of tablet, smartphone, model change over switch here obviously taking place, and I think people have read it all that. There are some model changes overtake, which taken place in Asia, North America which peoples transit down in one level and up to another model, you’ll see that happening. But besides that, the market seems to be pretty good.

The only market which we are just kind of struggling, and it’s been struggling obviously for some time is or segment is really it can be a prefer market, which is in kind of a little bit of a decline, print media, printing and of course storage, any illustration with the PC has been struggling. The rest of the business is growing quite well. All segments, all product groups, all product divisions are going. Again with some fluctuations depending on model changeovers, which we’ve normally expect to see this in anyway. And that’s normal anyway.

So the backlog for Q2, it looks pretty healthy. The forecast obviously, we’re not giving any forecast normally, but what we’ve given to the corporation in terms of sales, the corporation sales. It looks pretty healthy, no major concerns, no big cancellations and some short-term orders coming in. People are kind of nervous, so they are ordering in last minute and we’re seeing that.

In Asia, the big distribution channel, which is a very large channel for us it looks forward portions of business in Asia, its pretty healthy, is nowhere, no big stocking issues there. Europe is sluggish, clearly the industrial and automotive in particular, we’ll talk about that. North America, which I’m responsible for is doing quite well. Ultimately, it is improving, days of in between cars are in production are lower than they were in Q4 the other way and so we’re quite comfortable about the way the market is shaping up for us. And of course last year we predicted the second half the whole industry was hoping the second half will be much better. This year we really aren’t hoping this is going to be case and the forecast of my customer is such that there are new product cycles driving the growth in the second half. Last year we’re looking for the market recovery.

Simon Schafer – Goldman Sachs

When you talk about…?

Tait Sorensen

Simon if I could just clear up a point the minus 3% is for the wholly-owned businesses, that’s up the midpoint minus 70% which will be in total.

Bob Krysiak

Yeah, absolutely. I will (inaudible).

Simon Schafer – Goldman Sachs

Well, don’t worry we’ll come back to that. We will.

Bob Krysiak

Yes

Simon Schafer – Goldman Sachs

And Bob just, I mean are you talking about just an order uptick from the distribution channel, that’s a significant part of your business, which obviously last year when we look at the entire industry there was a lot of destocking going on, because we were in the bad environment and son on. But you have seen this destocking amongst and then amongst distribution partners and of course you’ve also seen a significant shortening in lead time.

Bob Krysiak

Yes

Simon Schafer – Goldman Sachs

So maybe just I mean just to clarify you talking about an uptick from distribution partners that you talking across the board. And then maybe also the final reminder, where your lead time is now compared to a year ago?

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