Chipset makers ST-Ericsson and Texas Instruments warned that their businesses could be impacted by declining sales of Nokia's (NYSE:NOK) legacy Symbian smartphones.
ST-Ericsson, the venture between Ericsson (NASDAQ:ERIC) and STMicroelectronics, said its fourth-quarter net loss widened to $231 million from $177 million a year earlier. The silicon provider, which counts Nokia as one of its largest customers, also said net sales fell to $409 million from $577 million in the year-ago period.
ST-Ericsson also warned of weakness ahead. "For the first quarter of 2012, ST-Ericsson expects a very significant sequential decline in net sales, resulting from a combination of higher inventory at some of our customers, further weakening of legacy product sales, the effect of first quarter seasonality as well as the reduction, in the short term, of new product sales with one of our largest customers," it said in a statement.
Separately, Texas Instruments CFO Kevin March told Reuters that revenue from the company's baseband unit, whose main customer is Nokia, will fall to about $75 million this quarter from $279 million in the fourth quarter.
STMicroelectronics also reported weak fourth-quarter results, mainly due to the poor performance at ST-Ericsson, and sounded cautious about 2012 growth. "A few years ago, sales to Nokia accounted for about 20 percent of our revenue, today it is around 10 percent and we think it will go lower," St Microelectronics CEO Carlo Bozotti said in a conference call on Tuesday. "We are focusing on expanding our customer base. But it's hard to cope with sudden, brutal cuts in volumes at your biggest customer."
Nokia, which reports its fourth-quarter earnings Thursday, is transitioning to Microsoft's (NASDAQ:MSFT) platform as its primary smartphone platform, and has been using Qualcomm's (NASDAQ:QCOM) chipsets so far. However, ST-Ericsson has said its Novathor chipset will be in future Nokia Windows Phones.
In November ST-Ericsson replaced CEO Gilles Delfassy with STMicroelectronics COO Didier Lamouche in a bid to turnaround the chipset vendor, which has struggled to keep pace with larger rivals since it was formed in 2009. Ericsson CEO Hans Vestberg said earlier this month that the company remains committed to ST-Ericsson despite having recently announced plans to shed its investment in its handset joint venture with Sony.
- see this Reuters article
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this separate Reuters article
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