STMicro Swings to a Profit

The company beats earnings and revenue expectations.
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Updated from 6:19 p.m. EDT

STMicroelectronics

(STM) - Get Report

swung to a first-quarter profit as automotive and wireless applications drove a 13.5% rise in revenue.

The Swiss chipmaker said it earned $132 million, or 14 cents a share, compared with a loss of $31 million, or 3 cents a share, a year earlier.

Excluding $13 million in other charges, the company would've earned 15 cents a share. On that basis, STMicro beat the Thomson First Call analyst estimate of 11 cents a share.

A year earlier, the company recorded $78 million in charges and costs.

On an operating basis, STMicro reported a profit of $140 million, compared with a loss of $68 million a year earlier.

Revenue rose to $2.36 billion from $2.08 billion, edging the First Call estimate of $2.29 billion.

Wireless revenue grew more than 40% from a year earlier, the company said.

The company said it expects sequential sales growth of 2% to 8% for 2006.

"Additionally, we expect to see sequential improvement in our gross margin, although some of our progress will not be visible in our reported gross margin figure in the second quarter, largely reflecting the final period of 6-inch manufacturing inefficiencies as we phase out three fab lines. Therefore, we believe it is appropriate to set a gross margin objective of about 35.8% plus or minus 100 basis points for the second quarter," said President and CEO Carlo Bozotti.

Shares of STMicro rose 8 cents, or 0.4%, in after-hours trading to $19.68 on Instinet.