STMicro searches for lost income

EUROPEAN CHIP maker STMicroelectronics saw fourth quarter profits plunge 93 per cent to $20 million and forecast an 2008 first quarter sales decline.

The drop in profits was blamed on Q4 restructuring charges of $279 million. For the full year STMicro hit sales of $10 billion. Q4 sales reached $2.74 billion.

Of the $279 million in charges, $249 million related to the plans for STMicro’s Flash Memory Group which is due to be merged with that of Intel. STMicro and Intel have delayed the merger of their flash businesses and said that they were struggling to find banks willing to finance the venture. ST said it expected the deal to close in Q1 08.

The firm also said that it would try to recover cash that had been lost due to “unauthorised investments” by an un-named “global financial institution”.

“In mid 2007, ST became aware that the managing financial institution deviated from its specific authorization and that ST had been credited with investments in unauthorized auction rate securities.

"As a direct result of these unauthorized investments, and the current market conditions for the underlying asset based securities, the company has recognized an impairment to the fair value of these securities in the fourth quarter of $46 million. The company is pursuing all available options to recover its losses from these investments.”

Fingers crossed, then. µ