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Infineon reports another loss, lowers sales forecast

Infineon Technologies AG, Europe's second-biggest semiconductor maker, reported a fourth straight loss after prices tumbled at memory-chip unit Qimonda AG, and cut its sales forecast.

The loss in the first quarter ended Dec. 31 was 396 million euros (US$579.3 million), or 53 euro cents a share, compared with a year-earlier profit of 120 million euros, or 15 euro cents a share, Infineon said in a statement yesterday.

Infineon, based in Neubiberg near Munich, said sales would rise by less than 10 percent this year excluding Qimonda, against a December forecast of as much as 10 percent.

POSTING A LOSS

The communication division, which makes custom chips for Nokia Oyj's mobile phones, is expected to post a loss this year before interest, taxes and one-time items.

Qimonda last month reported a first-quarter loss of 598 million euros as memory-chip prices tumbled amid a supply glut.

"The outlook is somewhat disappointing," said Ernst Konrad, who helps oversee 24 billion euros as head of equities at BayernInvest in Munich, including Infineon stock. "They lowered their 2008 sales forecast from my point of view, and that's not really good."

Infineon's sales sank 25 percent to 1.6 billion euros.

The company in December had forecast a profit for the communication division.

For the automotive and industrial division, whose clients include Siemens AG, Infineon confirmed that the December forecast for sales and earnings would be "slightly" down from a year earlier.

Excluding Qimonda, Infineon continues to aim for a 10 percent margin on earnings before interest and tax next year, Infineon chief executive officer Wolfgang Ziebart said.

"Uncertain prospects for the global economy, the adverse currency development, and the revised outlook are headwinds that make reaching this goal more challenging," he said.

MARGIN ON EARNINGS

Infineon's margin on earnings before interest, taxes and one-time items would be a "low to mid single-digit" percentage of sales this year, also excluding Qimonda.

Last month, Qimonda reduced its target for capital expenditure by 250 million euros for this year after putting the construction of a production site in Singapore on hold until after market conditions improve.

Prices for benchmark dynamic random access memory chips tumbled as much as 85 percent last year as supply outweighed demand, according to Dramexchange Technology Inc.
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