Following profits warnings from NXP, Qualcomm and Intel, STMicroelectronics shares fell to 5.1 euros after it said it expects Q4 revenues to be between $2.2-2.35bn compared to Q3 revenues of $2.7bn. Previous Q4 forecasts were that sales would be flat to 8 per cent down on Q3.
ST added that gross margin would slip slightly from 38.8 per cent to 38 per cent.
ST cited weakening demand in the wireless, automotive and computer peripheral sectors and concern over consumer electronics sales in December. Today, the world's largest consumer electronic supplier, Matsushita warned it expected a 90 per crop in profits for 2008 compared to 2007, blaming TV sales. Matsushita said it was expecting a 20 per cent price erosion in flat-screen TVs but has actually seen 30 per cent erosion. ST's largest single customer, Nokia, has also warned of an expected drop in sales revenues this quarter.
In response to the fall in demand, ST has said will it close plants for one or two weeks at the end of December to reduce output.
An upside for ST is the strengthening dollar which will, it is estimated, boost ST's earnings before interest and tax by between $9m and $10m a quarter.
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