STMicroelectronics Reports 2009 First Quarter Financial Results

- Revenues of $1,660 million, in-line with plans

- Gross margin of 26.3% negatively impacted by fab underloading

- Inventory reduced by $184 million

- Net financial position(*) increased to approximately $250 million net cash

GENEVA, April 29 /PRNewswire-FirstCall/ -- STMicroelectronics (NYSE: STM) reported financial results for the 2009 first quarter ended March 28, 2009.

    First Quarter 2009 Summary Financial Highlights (a)

             In Million US$ and %            Q1 2009    Q4 2008    Q1 2008

    Net Revenues                              1,660      2,276      2,478
    Gross Margin                               26.3%      36.1%      36.3%
    Net Income (Loss) per share               (0.62)     (0.42)     (0.09)
    Adjusted Earnings per share excluding
     impairment, restructuring and
     other-than-temporary-impairment          (0.31)     (0.06)      0.13
    charges and purchase accounting

    (a) The first quarter 2009 financial review includes ST-Ericsson for the
        months of February and March 2009, ST-NXP Wireless in Q4 2008 and the
        month of January 2009, and FMG in Q1 2008, except where noted.
    (*) Net financial position and adjusted earnings per share are non-U.S.
        GAAP measures. Please refer to Attachment A for additional
        information explaining why the Company believes these measures are
        important and for a reconciliation to U.S. GAAP.

President and CEO Carlo Bozotti commented, "The market environment during the first quarter was difficult, although our revenues and gross margin generally tracked to the plans we had at the beginning of the quarter.

ST's position in the wireless core business has improved significantly as a result of the completion of the wireless joint venture with Ericsson in early February. This action is a key milestone in reshaping ST's product portfolio and ST-Ericsson is now moving aggressively towards sustainable profitability.

Our overall operational performance in the first quarter was focused on mitigating the impact of market conditions on cash flow. We reduced our inventory levels by $184 million and we will continue to focus on inventory reduction.

Finally, ST has returned to a net cash position from a net debt position. Our actions to improve our financial flexibility continue to support our business strategy."

Revenue and Gross Margin Review

ST's 2009 first quarter net revenues of $1,660 million included $1,615 million from ST and $45 million from Ericsson Mobile Platforms (EMP), reflecting two months of operations of ST-Ericsson. Net revenues decreased 33.0% year-over-year driven by significant weakness across most geographies and market segments.

From Q1 2009, market segments have been adjusted to reflect direct sales by ST to Original Equipment Manufacturers and separate sell-in billing to Distribution. Sales recorded by ST-Ericsson and consolidated by ST are included in Telecom and Distribution. The following table provides a breakdown of revenues by market segment and channel:

    Net Revenues By Market Segment / Channel     Q1 2009    Q4 2008  Q1 2008
    (In %)                                                            ex FMG

    Market Segment / Channel:
       Automotive                                  12%        12%         15%
       Computer                                    11%        11%         12%
       Consumer                                    14%        14%         14%
       Industrial & Other                           8%         9%          8%
       Telecom (a)                                 43%        35%         32%
    Total OEM                                      88%        81%         81%
    Distribution                                   12%        19%         19%

    (a) Telecom net revenues include revenues from  the wireless ICs and
        platforms business through ST-Ericsson, from standard products for
        the wireless business and from  products for the telecom
        infrastructure business.

All market segments posted year-over-year declines reflecting the global economic slowdown. In comparison to the year-ago quarter, Automotive in the first quarter of 2009 declined 47%, Computer by 42%, Industrial by 41%, Consumer by 34% and Telecom by 9%. On a sequential basis, Industrial in the first quarter of 2009 decreased by 33%, Computer by 31%, Consumer by 29%, Automotive by 27% and Telecom by 11%. First quarter 2009 Distribution decreased sequentially by 52% and by 56% year-over-year and in both periods of comparison reflects weak industry conditions and reduction in inventory.

Gross margin in the first quarter of 2009 was 26.3%. Excluding the former Ericsson Mobile Platforms business, gross margin in the first quarter of 2009 was in-line with the Company's internal plan of mid to high 20s as a percentage of sales entering the quarter. As expected, unused capacity charges negatively impacted gross margin by over 8 percentage points. In the fourth quarter of 2008, gross margin was 36.1% as reported or, on an adjusted basis, 37.5% excluding inventory step-up purchase accounting adjustments related to the former NXP Wireless business(*). In the first quarter 2008, gross margin was 36.3%. Lower manufacturing efficiencies, volumes and price more than offset the improved contribution of product mix both sequentially and in comparison to the year-ago quarter.

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