("STMicro Swings To 1Q Loss On Wireless Weakness," published at 5:15 p.m. EDT, misstated the lower end of the company's second-quarter revenue guidance the 10th paragraph. The correct version follows:)
DOW JONES NEWSWIRES
STMicroelectronics NV (STM, STM.MI) swung to a first-quarter loss as weaker sales to wireless customers continued to drag down its bottom line.
STMicro has spent the last two quarters in the red, due partly to weaker computer sales, which offset growth from sales of automotive products.
The company has also contended with poor results from ST-Ericsson, a joint venture with Telefon AB L.M. Ericsson (ERIC) that has struggled to turn a profit since its formation in 2009. Sales have suffered amid a shrinking market for cheaper low-end cellphones and problems with handset maker Nokia Corp. (NOK), one of its key customers.
The wireless venture earlier Monday said it will transfer its application-processor research-and-development unit to STMicro as part of a new strategy to cut costs, reducing ST-Ericsson's total workforce by 1,700 employees, including those moving to STMicro.
"While there are still macro-economic uncertainties, we believe billings have bottomed in the first quarter," Chief Executive Carlo Bozotti said of STMicro. "Bookings have improved across the board during the course of the first quarter."
In the latest quarter, STMicro reported a loss of $176 million, or 20 cents a share, compared with a year-earlier profit of $170 million, or 19 cents a share. Excluding restructuring charges, tax effects and other adjustments, the company delivered a loss of 14 cents a share, down from a profit of 20 cents a share. Analysts expected a loss of 4 cents a share.
Revenue dropped 20% to $2.02 billion, in line with the range of $1.97 billion to $2.1 billion the company predicted in January.
Gross margin narrowed to 29.6% from 39.1%. The company earlier this month lowered its gross-margin guidance following an arbitration ruling that ordered the group to pay about $59 million to NXP Semiconductors Netherlands BV (NXPI).
Sales to STMicro's digital end market fell 31% due to a steep drop in imaging revenue tied to some of its wireless customers. Revenue in the wireless column, which includes the contribution from ST-Ericsson, decreased 24%.
Looking to the current quarter, STMicro said it expects its current-quarter revenue to grow between 4.5% and 10.5% sequentially, which would generate $2.11 billion to $2.23 billion of sales. Analysts polled by Thomson Reuters had projected a $2.17 billion top line.
Shares were up 1 cent at $5.96 after hours Monday. Through the close, the stock had fallen 50% over the past year.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com