STMicro mum after sending mixed messages on its future

The micro-chip giant STMicroelectronics was yesterday unwilling to clarify conflicting messages being sent by its top brass regarding the company's future.

Attempts to clarify a statement made on Monday by the group's chief operating officer Alain Dutheil, that the company had no plans to shut down any more plants, brought a "no comment" both by the local management and the Italian head office.

The group's human resource development director Tonio Portughese said: "Our position remains that of giving no comments". The communications office for the Italian simply referred to the "no comment" given by the local management.

There has been no word from the company following the revelation in The Sunday Times earlier last month that the group had asked the government for a financial support package running into tens of millions of dollars in order to stay.

The government then made a counter offer but until yesterday there had been no response, a ministry spokesman confirmed.

The chipmaker's CEO Carlo Bozotti had told the Financial Times last month that he had plans to close or sell a further 10 to 15 per cent of the group's operations worldwide.

But yesterday his colleague Mr Dutheil told the business and financial service Forbes.com that the company had "no plans to close down more factories" after shutting down three plants in the US and Morocco last year.

In his comments to the FT, Mr Bozotti clearly indicated that the group is concerned about the strengthening of the euro against the dollar.

In the first quarter, the falling dollar cut $140 million from operating profits, helping to push the company into a $84 million net loss, FT had reported. Mr Bozotti had said he had plans to divest three to five of the company's 30 product divisions and to close six factories, in a bid to save about $150 million from the downsizing.

"We need to do more pruning. We have taken many measures in the past year but the euro-dollar exchange rate is a real challenge," he said, pointing out that, while the company's sales were all in dollars, 40 per cent of its manufacturing costs and two-thirds of the research and development spend are in euros.

But his comments jar with those made by Mr Dutheil, who said clearly that there were no plans to close any more factories.

The Kirkop plant, which employs some 2,200 workers, and is Malta's biggest exporter, is said to be facing losses that could reach €58 million (Lm24.9 million) a year, primarily as a result of labour cost and exchange rate pressures.