mannerisms

Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.

French Government Tips ST Into Profit.

Thanks to a payment of $100 million from the French government under the Nano2017 R&D support programme, STMicroelectronics recorded its first quarterly profit for 11 quarters in Q2.

Q2 revenue was $1.86 billion and net profit was $38 million.

Free cash flow was minus $99 million compared to minus $51 million in Q1.

ST’s net financial position was $423 million at the end of June ($1.55 billion cash less $ $1.13 billion debt) compared to $612 million at the end of March.

The proceeds from ST’s recent sale of $1 billion worth of bonds will be accounted for in Q3′s balance sheet.

There is another $300 million due to come from Nano2017.

ST recorded a loss of $52 million on exiting the 3Sun solar power jv with Sharp and Enel which made solar modules in ST’s 300mm Catania fab which was never facilitised for chip production. Both Sharp and ST have now transferred their shares in 3Sun to Enel.

“During the second quarter we made positive business and financial progress in key areas,” says ST CEO Carlo Bozotti.

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7 Comments

  1. david manners
    July 30, 2014 07:32

    Yes indeed, Jack, they mentioned this French lob-out in both the Q4 and Q1 results calls so they’ve been anticipating it eagerly.

  2. Jack
    July 30, 2014 04:58

    Bozotti must be doing that famous Antonio Banderas smiling pose in Assassins movie when the envelope of $100M poped into his desk.

  3. david manners
    July 23, 2014 16:04

    Yes indeed Fred I expect it’s triples all round in the Agrate boardroom when the French hand-outs arrive.

  4. Fred Dart
    July 23, 2014 16:01

    Profit ! Ah, the sweet smell of success. Must be time for another bonus for Bozotti then ?

  5. david manners
    July 23, 2014 16:00

    Yes Jack, $140m negative cash flow in H1 and a $51m charge to exit 3Sun and net cash falls $200m in one quarter to $423m. No wonder they need the bond, they’re leaking cash like a sieve

  6. Jack
    July 23, 2014 14:58

    Less cash is worrying. They are going to use $1bn from bond to drive the company. MEMS is not doing well, maybe they loss the socket in iphone6 as they did not mention any design win with Apple except Chinese phone makers. We’ll see Bozotti call earning tomorrow.

  7. svs
    July 23, 2014 14:21

    As I had the chance to comment, the bond deal is politics. Banks are helping the governments not to face an occupational crisis. Governments make gifts to the banks in other forms.

    The fact of having issued a convertible puts ST in the same situation of FIAT some 10 years ago. If share price falls below strike, chances are that ST will be unable to reimburse. Then the banks will have two options: convert and become owner or restructure the debt. The parallel FIAT/ST is not 100% appropriate if we consider that on FIAT’s side the CEO was and is Marchionne.

    At the current cash burn rate, ST could have 12 months oxygen or less.

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