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Infineon losses narrow as sales climb 
Friday, July 19 2002
by Matthew Clark


German chipmaker Infineon Technologies shot good news into the semiconductor
industry on Friday, reporting better-than-expected Q3 earnings.

The Munich-based semiconductor producer cut its third-quarter net loss to EUR76
million, well down from its Q3 2001 loss of EUR371 million. The figure also beat
the expectations of analysts, who had forecast a loss of between EUR130 million
and EUR192 million.



On a per-share basis the company reported USD0.11 in losses for the quarter,
compared with a loss per share of USD0.59 in the third quarter of the last fiscal
year. Revenue reached EUR1.4 billion, 10 percent higher than it did in the
corresponding period last year. Despite the seemingly positive figures, however,
Infineon shares were down almost 4.5 percent to EUR16.85 at midday in trading on
the Frankfurt exchange. 



"Infineon continued to improve its business performance and gained market share
in an ongoing difficult market environment. We made further progress in cost
reductions and increased revenues... despite continuous strong pricing pressure
and adverse market conditions for memory products," said Dr. Ulrich Schumacher,
president and chief executive of Infineon, in a statement.



The company's losses before interest and taxes came to EUR107 million, which was
also better than the EUR598 million loss it booked last year. This latest figure
included inventory write-downs of EUR209 million and other charges of EUR51
million.



Looking forward with some limited optimism, the firm said in its second-half
outlook for memory products that there are signs of a moderate improvement in
demand. Still, it tempered those remarks by pointing out that strong pricing
pressure continued to exist, impacting earnings in the coming quarters. "Infineon
expects a further increase in demand, depending on the positive development of
the upcoming back-to-school season, the annual Christmas business and the next
corporate upgrade cycle in PC and infrastructure investments," the company said.




Importantly, in the mobile phones market, Infineon said it anticipates moderate
growth, driven in part by GSM and GPRS handsets. Moreover, the former subsidiary
of Siemens said it expects significant growth for its Bluetooth applications in
the next quarters leading to a worldwide market volume of around 45 million units
sold in 2002.