STMicroelectronics reported financial results for the fourth quarter and full year ended 31 December 2006.
Net revenues for the fourth quarter were $2,483 million, representing an increase of 3.9 per cent over the $2,389 million reported in last year’s fourth quarter. Year-over-year growth was driven by double-digit increases in the industrial and consumer market segments. Sequentially, net revenues decreased 1.2 per cent from the $2,513 million reported in the prior quarter, largely reflecting lower wireless sales.
President and CEO Carlo Bozotti commented, “Looking at the fourth quarter and near-term environment, the current market correction underway in some of the key applications we serve is more pronounced than forecasted. Our wireless results, in particular, came in well below historical seasonal revenue patterns and were also negatively impacted by product mix shift towards the low end, which put additional pressure on our margins and operating performance in the quarter.”
Net revenues for the year ended December 31, were $9,854 million, an increase of 11 per cent over the $8,882 million recorded in 2005. Strong growth in revenues was driven by double-digit increases in wireless and industrial, with mid-single digit contributions from the automotive, consumer and computer segments.
Carlo Bozotti continued, “For the full year, ST achieved double-digit, year-over-year sales growth in a market that appears to be growing in the high single digits. This is a clear signal that the evolution of our product portfolio is delivering results – with higher revenues, improved profitability, better leverage of our R&D and capital investments, and expansion of our market share.”
Gross profit was $901 million for the 2006 fourth quarter up from the $872 million in last year’s fourth quarter and a slight decrease from $904 million in the prior quarter. The gross margin was 36.3 per cent in the fourth quarter, showing some improvement from the 36.0 per cent reported in the prior quarter, despite the negative impact of fab closures and sequentially lower revenue. In the more favourable currency environment for the year-ago quarter, the gross margin was 36.5 per cent.
For the full year, gross profit increased 16 per cent to $3,523 million, from $3,037 million in 2005. The gross margin improved by 160 basis points in 2006 to 35.8 per cent from 34.2 per cent in 2005.
The stock market responded favourably, in the UK, to the company’s proposal of a E0.30 per share dividend – more than twice the E0.12 paid in 2007.
“The higher dividend signals management’s intent to reduce capital intensity and return subsequent cash generated to shareholders,” Andrew Griffin at Merrill Lynch told the Financial Times.