UPDATE 1-Chipmaker STMicroelectronics sees recovery in 2010

* CEO says revenues to return to pre-crises levels this year

* Expects 10-12 pct growth in global chip market in 2010

* Says company is still disadvantaged by strong euro

By Leila Abboud

PARIS Jan 27- (BestGrowthStock) – Europe’s top computer chip maker
STMicroelectronics (STM.PA: ) forecast its revenue would return to
pre-economic crisis levels this year despite being at a
disadvantage to U.S. rivals due to the strong euro.

“There is overall an economic recovery that is becoming more
global,” Chief Executive Carlo Bozotti said on a conference call
on Wednesday, predicting the semiconductor market would grow 10
to 12 percent this year.

“We saw it very much starting in Asia, in China for example,
already at the end of the second quarter,” said Bozotti.

“Now it’s more global, and very much driven by Western
economies. Europe and America are catching back up to a more
normal situation.”

STMicroelectronics on Tuesday posted better-than-expected
sales and gross margins for the fourth quarter, but missed
profit forecasts with a loss of 4 cents per share. The bottom
line was hurt by restructuring charges. [ID:nN26117612]

The French-Italian chip maker, whose chips are used in
everything from cars to mobile phones and DVD players, reported
its full-year results after strong earnings from rivals Texas
Instruments Inc (TXN.N: ) on Monday [ID:nN25194319] and Intel Corp
(INTC.O: ) earlier in January. [ID:nN15228962]

The series of results confirm that a recovery is underway in
the semiconductor sector as technology companies boost orders
for chips after a long slump.

The question now is how fast chip demand will grow in the
coming months, when it will peak, and whether it can be
sustained over the year, according to analysts.

Texas Instrument predicted that demand in the first quarter
would be better than usual, up 3 percent from the previous
quarter. Sales are typically lower in the first few months of
the year.

STMicroelectronics was more cautious, saying net revenue in
the first quarter would decrease 7 to 13 percent from the fourth
quarter.

“Today our order backlog is above the level we can serve,
but we do not think this will continue,” said Bozotti, adding
that there could be some “speculation” and over-ordering from
clients.

In a note, UBS analyst Gareth Jenkins wrote that
STMicroelectronics peers had given “more bullish guidance …
implying either conservatism on STMicro’s behalf or there are
market share issues at play.”

On the impact of currency exchange rates, Bozotti repeated
as he has in past quarters that export-oriented
STMicroelectronics was at “a significant competitive
disadvantage” to its rivals because of the strong euro.
penalised by the level of the euro.”

He said the company had taken measures such as currency
hedging and cost cuts to blunt the impact.

“We are now ready to operate with a dollar at 1.50 euros but
we do not like it at all,” he said.

Shares in STMicroelectronics were down 0.8 percent at 6.05
euros at 1039 GMT while the DJ Technology Index (.SX8P: ) was down
0.4 percent.

Stock Research

(Additional reporting by Marie Mawad; editing by Karen Foster)

UPDATE 1-Chipmaker STMicroelectronics sees recovery in 2010