STMicroelectronics NV (STM)
Company Conference Call
November 17, 2011 10:30 am ET
Didier Lamouche – Chief Operating Officer
Tait Sorensen – Investor Relations
Gareth Jenkins – UBS
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Okay, we’ll make a start. For those of you that don’t know me, I’m Gareth Jenkins, the European Hardware Analyst here at UBS. It’s my great pleasure to introduce Didier Lamouche, who is the COO of STMicro, as well as Tait Sorensen, IR. Without further ado, Didier, over to you. Thank you.
Okay, thank you. Good morning everybody. I’m very proud and happy to be with you. I’m with ST. If you allow me to spend 30 seconds introducing myself. I joined ST a little bit less than a year ago as the Chief Operating Officer. Actually I was coming from a different industry but I spent before that 20 years in the semiconductor industry in companies like IBM, where I was running worldwide operations out of Somers here for a while, Motorola, Infineon and Philips. I quit that industry in 2003. I was offered to turn around a company that maybe some of you know called Bull, Honeywell Bull, which I did and sold the company to a new shareholder in 2010. And in the meantime, I joined the supervisory board of ST between 2006 and 2010, and this is one of the reasons why, because I knew the company already a bit, this is one of the reasons why Carlo Bozotti offered me to take the role of Chief Operating Officer, which I’m glad to have now since 10 months. And when I tell you I’m glad to take it and to be in this role since 10 months, it’s not exactly true because I have never seen such a rough time, even in the semiconductor business, as in the last 10 months when you accumulate what happened in Japan, what happened in North Africa – I remind you we have a factory over there; what happened in Libya – we have two factories close to Libya, what happened to one of our main customers – I won’t mention the name. It has been a rough—and now in Thailand even, it has been a rough year. So to a point, my wife sometimes tells me what have you done wrong since 10 months? Everything was nice before and now everything goes under. So, anyway.
Just to cut a long story short, I will not present anything more than two charts just to give you the overall picture of what is ST today. I’m sure you very well know, so I will not comment these charts. You know that last year we did $10.35 billion revenue, 53,000 people, et cetera. So I think you know. Maybe more interesting is this one, just to launch the questions and debate. This is the revenue profile of the company for the nine first months of 2010, so the way we report our reserves is this one. Automotive now for the first nine months is representing 18% of our revenues, strongly helped you will see what we call CCI, our computer and communication infrastructure business is representing 10%. Our HDD business, which is essentially consumer plus displays, imaging devices that we mostly sell to cell phone makers, is representing 14%, and then the biggest chunk of our business is composed of analog MEMS and microcontroller product business, representing 30%. The power and discrete product segment represents 13% and the wireless segment is now only, I should say quote-unquote, 15% of our business. And the last introductory chart is showing you in fact the growth that we are registering since the first nine months of the year. On this perimeter, the automotive business, despite the fact that we see a severe slowdown today, is still recording pretty strong and healthy growth of plus-28%. Where we suffer the most besides wireless is actually the CCI business – minus 8% in the first nine months which is in fact responding to the fact that we are getting out of the SOC business of the disc drive industry. We were having two big customers that we were providing historically with SOC, and we retained the business consisting of developing the motor controlled chips, and we are getting out of the SOC business. This is why we are registering now minus-8% performance year-to-year.
Minus 3% for the HDD part of our business. I should say this one is actually composed to two elements. The consumer part of our business has decreased much deeper than minus 3%, but the volume and the revenue we sustained by significant growth and healthy situation in the display part, the imaging part of this business; and the blended average makes minus 3% for the first nine months of the year.
Healthy enough, the analog and MEMS and microcontroller part of our business for the first nine months – plus 19%, which is a remarkable performance driven mostly by MEMS but not only, also by micros and analog. The power discrete, the PDP business is plus 4; and of course just to finish with this one, our wireless business which is essentially composed of ST business plus all products we sell—ST products we sell to the wireless customer is decreasing sharply year-to-year to minus 31%. The wholly owned business revenue trend, which means everything except wireless, is growing 9.3% on the first nine months of the year, and this has be compared roughly to 2 to 3% growth for the year for the sum, okay? So clearly on that part of our business, we are taking market share for the first nine months of the year pretty significantly.