Citing further deterioration on the worldwide financial markets, economic recession in one or more of the world’s major economies and the effect on demand for semiconductors, STMicroelectronics cut its financial guidance. The company now expects fourth quarter revenues to be between approximately $2.2 billion and $2.35 billion, as compared to $2.7 billion reported in the prior quarter, or a sequential change in the range of about -12.8% to -18.4%. The revised revenue outlook is the consequence of a recent slowdown in the billings, recent and substantial changes in customers’ demand and order push-outs for the month of December. ST said the weaknesses affects most geographies and market segments, and, in particular, in wireless, automotive, and computer peripherals.
ST also noted that it will reduce its manufacturing activity and reduce sourcing from third-party suppliers, compared to planned activities when entering the quarter. Primarily as a result of higher-than-anticipated unused capacity charges in the quarter, the gross margin expected for the fourth quarter 2008 is now about 38% plus or minus one percentage point.
Additionally, the company continues to aggressively implement cost-control initiatives and is progressing in its accelerated effort to capture the cost synergies from the recent creation of ST-NXP Wireless.http://www.st.com
