STMicro shares rise on bright outlook, despite 1Q loss

The stock traded up 4.5 percent at $12.08 on the Paris stock exchange Tuesday.

The company issued a statement in New York late Monday saying it lost $84 million, or 9 cents per share, during the first three months of the year compared with a profit of $74 million, or 8 cents per share, during the same period in 2007.

Excluding restructuring and impairment charges and other items, STMicroelectronics earned 13 cents per share on revenue of $2.48 billion in the first quarter. On the same basis, analysts polled by Thomson Financial expected, on average, a profit of 18 cents per share on sales of $2.52 billion.

Chief Executive Carlo Bozotti said the company predicts growth "much stronger" than 4 percent to 6 percent. Orders in the current quarter are "very strong" and there are "initial good signs" for the third quarter, Bozotti said on a conference call.

He shrugged off concerns about the wireless chip market after disappointing results for mobile phone makers, a major customer for STMicro. But he said the declining U.S. dollar was a concern because the company generates most of its revenue in the U.S. currency.

"We have worked on reducing our dependence on the euro, but no matter how fast we move in that direction, the decline of the dollar is faster," Bozotti said.

The company, formed by the merger of French and Italian state-owned chip makers in 1987, said it expects second-quarter sales to increase as much as 11 percent from the first quarter's $2.18 billion, excluding the spun-off flash memory division.

"The outlook on Q2 is better than we expected," CM-CIC Securities analyst Francois Gobron in Paris said in a note to investors. "It shows that the weak activity seen in Q1 should not persist for the rest of the year."

The company recently closed a deal to create a flash memory chip joint venture with Intel Corp. and investment company Francisco Partners. STM spun off its flash memory business into the new company, Numonyx. Also in the first quarter it closed its $336 million purchase of Genesis Microchip Inc., based in Alviso, Calif.