STMicro sees profits soar on mobile phone frenzy

Chipmaker STMicroelectronics saw net income more than double for the second quarter thanks to demand for mobile phones.

Profit for the period rose to $336 million for the three months ended 1 July 2000, from $122 million for Q2 the previous year.

This brought profit for the first six months of the year to $575 million, compared to $228 million a year earlier.

Sales soared 58 per cent to $1.88 billion - bringing the total for the two quarters to $3.5 billion, compared to $2.2 billion in 1999.

Gross margin for Q2 2000 increased to 46 per cent from 39.5 per cent.

The company's success stemmed from its concentration on chips for more lucrative markets, such as mobile phones and digital cameras.

Pasquale Pistorio, STMicro president and CEO, said: "The primary drivers of second quarter revenue growth were continued strong unit demand and improved product mix. Revenues also benefited from greater internal capacity and from a better pricing environment."

According to Pistorio, revenue increased "across all major product families and applications". The best jump in sales was in Consumer and Telecom Applications, which saw sequential revenue increases of 21.9 per cent and 12.3 cent, respectively. Standard and Commodities and Logic and Memories products saw sequential increases of 17.2 per cent and 14.7 per cent, respectively.

Pistorio remained upbeat regarding the future: "We continue to experience record incoming order rates and backlog levels, indicating that the market recovery remains robust and that ST's technologically-advanced product portfolio is well suited for next generation applications.

"Increasing order visibility leads us to expect that, despite traditional seasonal factors, third quarter revenues should show sequential improvement over second quarter levels. Additionally, we anticipate that the company's operating margin for the third quarter will be above the record level achieved in the second quarter of this year." ®