Infineon Expects Quarterly Loss
Updated from 12:00 p.m. EST
German chipmaker
Infineon Technologies
(IFX)
expects to post a first-quarter loss as selling prices slumped for DDR2 memory chips.
The company said Friday it expected to lose 183 million euros (about $217 million), or 0.25 euro a share.
Revenue was 1.67 billion euros (about $2.02 billion).
Following the announcement, shares of Infineon were recently off nearly 5% to $9.24, contributing to an already glum day among semiconductor names. The
Philadelphia Semiconductor Index
, fresh off a 52-week high, was recently down 3.7% as cautious guidance the night before from
Xilinx
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and a sluggish book-to-bill report hurt chip-equipment names like
Applied Materials
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.
Infineon said two of its logic segments -- the Automotive, Industrial and Multimarket unit and its Communication division -- performed ahead of internal and analysts' expectations.
However, that favorable development couldn't offset "significant deterioration" of the cash flow in memory products, due mostly to a strong fall in average selling prices, in particular for DDR2 memories.
The memory-chip business is extremely volatile and recent price swings have also affected
Micron
(MU) - Get Micron Technology, Inc. Report
, whose fiscal
first-quarter profit was cut by more than 60% as a result of what the company said was a 15% decline in the price of PC DRAM.
Infineon
announced plans in November to get out of the memory business, which accounted for about 41% of the company's overall revenue in the company's fourth quarter. Infineon intends to divest itself of the business in July, with a subsequent IPO of the memory business as the ideal option. The spinoff will allow Infineon to focus on its higher-margin logic business, selling analog, mixed-signal and radio frequency chips to automotive and industrial markets.
