STMicroelectronics: shares drop on weak results
Shares in memory chip maker STMicroelectronics slumped by 7.99 percent in early trading on Tuesday after the firm reported disappointing quarterly results and a weak sales outlook.
The French-Italian company reported late on Monday that in the second quarter it had made a net profit of $420 million (290.0 million euros), marking an 18.0-percent increase from the equivalent figure last year.
But in terms of earnings per share, the net figure amounted to 14 cents, far below analysts' estimate of 22 cents.
Sales rose by 1.4 percent to $2.57 billion, in line with expectations.
The price of shares in the company fell by 7.99 percent to 5.88 euros. The overall market as measured by the CAC 40 index was steady, showing a marginal gain of 0.01 percent.
Chief executive Carlo Bozotti said that in the quarter, disruption from earthquake damage in Japan had been a problem for the firm and exchange rates had also had a negative effect.
And in June demand had eased. In addition the outlook for sales of products for wifi applications to a major customer were far weaker than had been expected. The company had also seen signs of slowing demand for digital consumer products and for microcontrollers.
Consequently the group had had to act quickly at the beginning of this third quarter to reduce production at some factories.
The group said that sales in the third quarter would be in a range from 5.0-percent lower to 2.0-percent higher compared with sales in the second quarter. Analysts had expected an increase of 6.0 percent to $2.73 billion.
At brokers Exane, analysts said that market operators had been surprised by the unexpectedly weak results.
© 2011 AFP