UPDATE 1-STMicro shares fall post results on JV fears

* Shares fall 2.9 percent

* Q2 net revenue $2.53 billion, vs $1.99 bln year earlier

* ST-Ericsson JV posts Q2 net loss of $139 million

(Adds management comments, background and market reaction)

PARIS, July 23 (BestGrowthStock) – Shares in chipmaker
STMicroelectronics (STM.PA: ) fell on Friday as losses at its
ST-Ericsson joint venture offset the second-quarter profit (Read more your timing to make a profit.) and
stronger-than-expected sales forecast it published overnight.

The Franco-Italian company said sales of chips to automotive
and industrial customers grew briskly during the second quarter
while its wireless chip joint venture with Sweden’s Ericsson
(ERICb.ST: ) continued to lose money.

By 0909 GMT shares were down 2.9 percent, underperforming a
0.6 percent softer European technology sector index (.SX8P: ).

Analysts voiced doubts about the struggling joint venture
which makes wireless radio chips for mobile phones.

“The continuation of the recovery is confirmed by this
publication, except for the ST-Ericsson joint venture, where the
situation continues to worsen,” said one trader.

One analyst wrote in a research note that earnings were
better than expected but ST-Ericsson “continues to spoil

ST-Ericsson reported a second-quarter net loss of $139
million as sales fell roughly 18 percent to $544 million.

“ST-Ericsson is progressing on track with its restructuring
plan. Major transition cannot be achieved overnight, and this is
the case here … we are committed to this wireless joint
venture,” Chief Executive Carlo Bozotti told a conference call
on Friday.

ST-Ericsson, whose customers include Nokia (NOK1V.HE: ) and LG
Electronics (066570.KS: ), is revamping its product portfolio
partly to meet growing demand for smartphones.


STMicro said net revenue in the three months ending June 26
totaled $2.53 billion, compared with $1.99 billion in the
year-earlier period and slightly below the $2.59 billion
expected by analysts polled by Thomson Reuters I/B/E/S.

“What we see today is a strong flow of order income; there
is no slowdown,” CEO Bozotti told the conference call.

The chipmaker told an investor presentation last month it
saw strong demand for the third quarter and a normal build-up of
orders for the fourth quarter. [ID:nLDE6520WZ]

Yet like rivals it is wary of a reprise of a decade ago when
the industry tacked on too much capacity too quickly and was
then burned when demand waned.

STMicro’s results come after rivals Intel (INTC.O: ) and
Advanced Micro Devices Inc (AMD.N: ) reported forecast-beating
results for the quarter, fueling optimism about the chip sector.
[ID:nN12197658] [ID:nN15264825].

STMicro, the world’s fifth-largest chipmaker, has focused on
cutting costs and said its gross profit margin was 38.3 percent
in the second quarter, up from 37.3 percent in the first.

STMicro reported second-quarter net income of $356 million
that included a $264 million net gain primarily due to the sale
of its stake in the Numonyx memory chip business. In the second
quarter of 2009, STMicro had a net loss of $318 million.

Stock Market Money
(Reporting by Leila Abboud and Simon Johnson; Additional
reporting by Alexei Oreskovic and Marie Mawad; Editing by
Bernard Orr and Michael Shields)

UPDATE 1-STMicro shares fall post results on JV fears