STMicroelectronics Lowers 4th Quarter Revenue Forecasts

STMicroelectronics has lowered its revenue forecast for the fourth quarter and 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% to -18.4%.

The company said that 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.

The Company 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% plus or minus one percentage point.

Additionally, the Company 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.

This outlook is based on an assumed effective currency exchange rate of approximately $1.40 to the Euro for the 2008 fourth quarter, which reflects current exchange rate levels combined with the impact of existing hedging contracts. Additionally, as per the prior outlook for Q4 2008 released on October 28, 2008, this outlook includes the results of the ST-NXP Wireless joint venture - which began operations on August 2, 2008 - for the full quarter, but excludes an estimated US$30 million cost in the fourth quarter 2008 due to inventory step-up purchase accounting adjustments related to the former NXP Wireless business.

Posted to the site on 28th November 2008