Fourth quarter report 2012
Fourth quarter report 2012 Fabrizio Rossini Head of investor relations
Safe harbor This presentation contains forward-looking statements that involve inherent risks and uncertainties. We have identified certain important factors that may cause actual results to differ materially from those contained in such forward-looking statements. In particular, the forward looking statements contained in this presentation and the fourth quarter 2012 closing are based on a going concern assumption. In the month of December 2012 ST-Ericsson’ shareholders issued press releases about their future intent with respect to ST-Ericsson, on December 10 by STMicroelectronics and on December 20 by Ericsson. Please consider this presentation in conjunction with this information. For a detailed description of risk factors see STMicroelectronics’ (NYSE:STM) and Ericsson's (NASDAQ:ERIC) filings with the US Securities and Exchange Commission, particularly each company's latest published Annual Report on Form 20-F. 3 Fourth Quarter 2012 Report
Fourth quarter report 2012 Didier Lamouche President and CEO
Transforming our company Culture • From technology focus to customer focus Company Organization • Sustainable profitability • Execution • From brilliant ideas to • Simplicity products delivered on Customers time • Speed • Engage with market • Focus shapers Products • Diversification • Clear market strategy • Focused portfolio approach • Differentiation Solid execution in 2012 in line with the transformation roadmap 5 Fourth Quarter 2012 Report
Transforming our company Culture • From technology focus to customer focus Focused roadmap Company Organization • Sustainable profitability • Execution • From brilliant ideas to • Simplicity products delivered on Customers time • Speed • Engage with market • Focus shapers Products • Diversification • Clear market strategy • Focused portfolio approach • Differentiation Application processor partnership Solid execution in 2012 in line with the transformation roadmap 6 Fourth Quarter 2012 Report
Transforming our company Culture • From technology focus to customer focus Focused roadmap Company Organization • Sustainable profitability • Execution • From brilliant ideas to • Simplicity products delivered on Customers time • Speed • Engage with market • Focus shapers Products • Diversification • Clear market strategy • Focused portfolio approach Feature • Differentiation phones Application processor partnership Solid execution in 2012 in line with the transformation roadmap 7 Fourth Quarter 2012 Report
Transforming our company Culture • From technology focus to customer focus Focused roadmap Company Organization • Sustainable profitability • Execution • From brilliant ideas to • Simplicity products delivered on Customers time • Speed • Engage with market • Focus shapers Products • Diversification Activities • Clear market consolidated strategy from 44 to • Focused portfolio 31 sites approach Feature • Differentiation phones Application processor partnership Solid execution in 2012 in line with the transformation roadmap 8 Fourth Quarter 2012 Report
LTE final stage Transforming our company certification & customer test Culture • From technology focus to customer focus Focused roadmap Company Organization • Sustainable profitability • Execution • From brilliant ideas to • Simplicity products delivered on Customers time • Speed • Engage with market • Focus shapers Products • Diversification FD- SOI Activities • Clear market consolidated strategy from 44 to • Focused portfolio 31 sites approach Feature • Differentiation phones Application processor partnership Solid execution in 2012 in line with the transformation roadmap 9 Fourth Quarter 2012 Report
Transforming our company Culture • From technology focus to customer focus Company Organization • Sustainable profitability • Execution • From brilliant ideas to • Simplicity products delivered on Customers time • Speed • Engage with market • Focus shapers Products • Diversification • Clear market strategy • Focused portfolio approach • Differentiation Solid execution in 2012 in line with the transformation roadmap Recent external developments increase the level of uncertainty going forward 10 Fourth Quarter 2012 Report
Accelerating TTM NovaThor launches 2012 Samsung Galaxy S III mini Shanda Bambook S1 HTC T329T Yulong Coolpad CP7728 HTC One SU Motorola Sony HTC XT760 Xperia P One SC Samsung Sony Galaxy Beam HTC Xperia U One ST Sony Samsung Xperia go Galaxy S Advance Samsung mMax Ontim Tablet+Phone Galaxy Ace2 WP8500 Tablet Lenovo Sony Via LePhone Xperia Sola U8500 S899t 11 Fourth Quarter 2012 Report
Portfolio execution ∙ Thor M7400 – LTE multi-mode ∙ Certification nearing completion ∙ Extensive field testing ongoing ∙ Market ready ∙ NovaThor L8540 – integrated LTE ModAp ∙ Sampled and testing with customers ∙ Ready for market mid 2013 ∙ NovaThor L8580 – FD-SOI integrated LTE ModAp ∙ First samples in December ∙ Breakthrough nature of technology confirmed ∙ Fastest and lowest power mobile processor 12 Fourth Quarter 2012 Report
Faster NovaThor™ L8580 Faster in the real world Video transcoding before YouTube upload Full HD HD 720p Product A - Quad A9 1.5GHz Faster processors Product B - Quad Krait 1.5GHz (not just more cores) Product C - Quad A9 1.4GHz means faster apps L8540 – Dual A9 1.85GHz L8580 – eQuad 2.5GHz Lower is better 0,6 x times slower 0,8 1 1,2 1,4 1,6 x1.2 x1.4 x1.6 slower slower slower 13 Fourth Quarter 2012 Report
Cooler Transistor innovation FD-SOI Ultra-Thin buried Ultra-Thin oxide layer Channel Top gate Gate Drain Source Drain Source Buried Oxide (BOx) Buried gate Bulk Vertical double-gate Smart body biasing transistor Transistor FD- SOI Transistor 14 Fourth Quarter 2012 Report
Simpler NovaThor eQuad Vertical Double Gate Transistor High Performance mode Low power mode Top Gate voltage Top Gate voltage Low power mode High Performance mode Back biasing Back biasing 15 Fourth Quarter 2012 Report
Q4 Revenues ∙ $358 million in line with outlook provided MUnits MUSD ∙ NovaThor ModAp platforms continue to 12 700 grow as largest revenue segment with 11 600 10,7 10.7 million units shipped 10 9 ∙ Feature phones and legacy about 35% 500 8 of total 7 7,4 400 ∙ Revenues included $43 million from 6 300 licensing (vs. $35 million in Q3) 5 5,3 4 Q1 Outlook 200 3 2 100 ∙ Very significant sequential decline in net 1 1,3 sales due to: 0 0 Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412 ∙ Q1 seasonality ModAp platforms MUnits Revenue MUSD ∙ No licensing revenues expected ∙ Further decline of legacy product ∙ Double digit YoY growth excluding NovaThor shipments up 45% vs. Q3 former largest customer 16 16 Fourth Quarter 2012 Report Fourth Quarter 2012 Report
$ million 2012 2012 2012 2012 Delta Q4 Q3 Q2 Q1 Q4 Financial Overview vs Q3 Net sales 359 344 290 (1) 358 ∙ Net sales $358 million, flat vs Q3 Adjusted (148) (235) (297) 15 (133) Operating • Execution of cost transformation initiatives income/(loss)* ahead of plan: Net operating (146) (249) (159) (6) (152) cashflow *:.Adjusted Operating Income/(Loss) is a non-GAAP measure. Please refer to the press release for details. • About 1,600 resources, 26% reduced Adjusted operating income/(loss)* • $53 million savings vs. Q4 2011 • Operating loss continued to reduce : $15 million reduction sequentially; $164 million $ million or 55% since Q1 2012 • -$152 million net operating cashflow OPEX indexed to Q1 2009 1 • Recapitalization during Q4 by shareholders 0,9 waiving $1.54 billion of loans 0,8 0,7 0,6 Q4 09 Q4 10 Q4 11 Q4 12 Continued reduction of losses thanks to solid execution of plans 17 17 Fourth Quarter 2012 Report Fourth Quarter 2012 Report
2012 Redefined the scope of the company Focused resources on modem and ModAp system integration while • partnering on key technology blocks Consolidated our R&D to a smaller number of sites • Aggressive transformation of our cost structure … Put in place the right organization to deliver with sense of urgency • Reduced cost and operating losses faster and to a greater extent than • planned .. While improving our product delivery capabilities Great market traction for our first generation of NovaThor platforms, with • more than 20 devices successfully launched Our first LTE NovaThor platforms and Thor modems ready to hit the market • in 2013 Sampled our next generation FD-SOI silicon–based NovaThor as committed • 18 Fourth Quarter 2012 Report
Positioning for 2013 Recent external developments significantly increase the level of • uncertainty going forward However, we remain focused on execution of • our unique assets: Revolutionary Thor LTE modem • Highly integrated LTE ModAp platform • Groundbreaking low power, high • performance next generation ModAp ST-Ericsson’s management is committed to exploring all solutions to ensure that our expertise and capabilities will continue to play a leading role in innovation in the wireless industry 19 Fourth Quarter 2012 Report
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