STMicroelectronics Reports 2010 Second Quarter and First Half Financial Results

Second quarter net revenues increased 27% on a year-over-year basis, with all regions and market segments, excluding Telecom, posting double-digit revenue growth. Regional growth was led by the Americas with sales growth of 45%, followed by Greater China-South Asia with a 39% increase in net revenues.

President and CEO Carlo Bozotti commented, “ST posted another quarter of improvement in the Company’s financial performance, with revenues, gross margin, operating and net income all showing progressive strengthening sequentially and year-over-year.

“We were particularly pleased with demand for both IMS and ACCI. In combination, IMS and ACCI delivered sales growth of 51% year-over-year and 16% sequentially. Obviously, we are not satisfied with the results in wireless. However we are encouraged by ST-Ericsson’s progress in achieving key design-wins as well as restructuring towards a progressive recovery.

“Gross margin increased 60 basis points sequentially to 38.3% due to manufacturing efficiencies and product innovation. This improvement comes on top of the first quarter sequential increase of 70 basis points.

“Net income of $356 million reflected the gain on the sale of Numonyx to Micron as well as the improving profitability of our core businesses. As our results demonstrate, we are well positioned to achieve our financial targets as evidenced by the 7.7% adjusted operating margin attributable to ST in the second quarter.*

“Thanks to our consistent focus on cash generation, we have further strengthened our net financial position to over $700 million compared to $420 million at the end of 2009”.*

(*)Adjusted operating margin attributable to ST, adjusted EPS (diluted) and net financial position are non-U.S. GAAP measures. Adjusted operating margin attributable to ST is calculated as operating income before impairment and restructuring charges (excluding 50% of ST-Ericsson JVS) ÷ reported revenues excluding 50% of ST-Ericsson JVS revenues. Please refer to Attachment A for additional information explaining why the Company believes these measures are important and for a reconciliation to U.S. GAAP.