Infineon explores Qimonda stake cut after weak Q3

Wolfgang Ziebart said on a conference call he could not be more specific about the options Infineon was exploring but added: "Long-term, we do not expect to own any Qimonda shares."

Earlier on Friday, Infineon posted lacklustre results for its core logic business in phone, automotive and industrial chips. Earnings before interest and tax (EBIT) were flat quarter on quarter at 13 million euros ($18 million).

Profits were hurt by a strong euro and restructuring charges, while sales at the phone-chips division, whose customers include Apple and Nokia, grew by a slower-than-expected 9 percent.

Infineon said it expected EBIT to grow strongly at its former Qimonda businesses this quarter and sales should also rise, driven by the phone chips business.

Shares in Infineon traded up 3.3 percent at 12.60 euros by 0905 GMT, the best performer in a flat German blue-chip DAX index, reversing sharp losses at the market open.

A reduction of Infineon's 86-percent stake in Qimonda -- which, like other memory-chip makers reported deep losses last quarter -- is seen as necessary to boost Infineon's valuation.

Total sales at Infineon's core businesses rose 3 percent in the quarter to end-June over the previous quarter to 1.01 billion euros, in line with forecasts.

EBIT at automotive and industrial division AIM declined slightly, excluding a one-off gain from the sale of a fiber-optics unit.

"The numbers themselves were a bit light in the logic businesses, especially on the (communications division) Com revenue side," said analyst Scott Geels of Sanford Bernstein.

"I think that's just timing and they'll come back over the next quarter, but I think people were hoping for a bit more."

IMPROVEMENTS SEEN

Infineon reiterated it expected its wireless business to break even in the fourth calendar quarter but did not mention its previous goal of breaking even at the EBIT level this fiscal year after the poor results from Qimonda this week.

Overall, sales should improve this quarter and EBIT should show a strong increase, Infineon said.

"With positive EBIT and an improved EBIT margin in the third quarter, Infineon excluding Qimonda made further progress towards sustainable profitability," Ziebart said in a statement.

"Going forward, we aim for further improvements in our EBIT margin and we will continue to strengthen our core businesses."

The company said revenue would be driven by mobile phone chips after a number of important customer wins recently, such as with Apple for its iPhone.

In the third quarter, Infineon won new contracts from telecoms equipment makers Ericsson and ZTE but did not announce any new handset makers as customers.

In the third quarter, Infineon narrowed the operating loss at its communications division, Com, to 34 million euros, as expected. Sales of 259 million euros at the division were lighter than expected.

The Automotive, Industrial and Multi-market division posted EBIT of 81 million euros, boosted by the disposal gain, and sales of 752 million euros, in line with expectations. Excluding the gain, AIM sales declined slightly from the previous quarter.