STMicro reports switch to profit, Ericsson factor hits stock

French-Italian semiconductor maker STMicroelectronics said yesterday it returned to profit in the second quarter but the news did not help its shares, hit by concerns over its Ericsson tie-up.

The company said it had a net profit of $356 million (€276 million) in the three months to June, compared with a loss of $318 million in second quarter 2009.

Sales jumped 27 per cent from a year earlier to $2.53 billion and were up 8.9 per cent from the first quarter.

Chief executive Carlo Bozotti said the figures allowed the company to confirm its 2010 forecasts for 20 per cent sales growth after an expected 13 to 19 per cent gain in the third quarter.

The fourth quarter, he said, looks equally strong.

On the Paris market, shares in STMicro, Europe's biggest chip manufacturer, were down 3.18 per cent to €6.23 while the overall market was up 0.43 per cent. Dealers said the downturn reflected concerns over the company's venture with Swedish telecom equipment maker Ericsson which reported a gain in second quarter profits but a fall in sales yesterday, disappointing investors.

Ericsson shares slumped 5.5 per cent in Stockholm on the news.

Mr Bozotti said he was not happy with the results at ST-Ericsson, their specialist joint venture in wireless technologies.