Gloomy ST claws back spending
STMicroelectronics has reduced its capital expenditure budget for the year to $2bn, an approximate 10% reduction on previous plans. For 2005 capital spending is currently being budgeted at $1.5bn.
President/CEO Pasquale Pistorio comments: "We are fine-tuning our product portfolio and our organisational structure to leverage ST's product leadership positions and expand the breadth of our application platforms and solutions. These programmes, together with the migration to finer geometries and our ongoing market initiatives, are expected to position ST for profitable growth in 2005."
ST reports Q3 2004 net revenues at $2.231bn resulting in an operating income of $213mn. These compare with Q3 2003 net revenues of $1.803bn and an operating loss of $64mn, giving a year-on-year increase for Q3 2004 sales of 23.7%. The company anticipates flat to 5% growth in sales between Q3 and Q4 - below earlier ST expectations and historical seasonal trends. Q4 gross margins are forecast at 38-39%.
"We share the view expressed by many analysts that the 2004 fourth quarter will be a period of relatively modest growth for the semiconductor industry, resulting from lower-than-anticipated growth in end-market demand which has caused inventory build-ups in certain market segments and has constrained pricing power," says Pistorio.
