STMicroelectronics posts switch to profit

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Paris - French-Italian microchip manufacturer STMicroelectronics on Wednesday reported a switch into profit in the second quarter, but its outlook disappointed investors and the shares fell.

The company, an indicator of activity in high-tech industries, reported a net profit of $38 million (28 million euros), compared with reported losses of $24 million in the first quarter and $152 million in the second quarter of 2013.

The results put it on track to meet its target of returning to profit for the whole of this year.

Sales totalled $1.86 billion, whereas analysts had expected $1.88 billion, and the gross operating margin was 34.0 percent compared with 33.6 percent expected.

Shares in the company were down 1.62 percent to 6.85 euros in morning trading.

For the third quarter, the company forecast that its margins would improve and that sales would rise by about 3.0 percent from the level in the second quarter.

Brokers Aurel BGC commented that the second quarter marked the first profit in 11 quarters and that recurrent losses from a joint venture with Swedish group Ericsson “are now past history”.

At Morgan Stanley, analysts commented that the overall figures were satisfactory but that “sales in the second quarter and the outlook for the third quarter could have been higher given the positive trend in the semi-conductor sector, in particular in the auto and industrial sectors.”

Analysts at Barclays brokers said that this 3.0-percent figure was below consensus estimates of 5.1 percent but was in line with recent figures from companies with similar activities, Texas Instruments and Lienar Tech. - Sapa-AFP

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