German semiconductors maker Infineon plunged into loss in the three months to June, hit by declining demand and falling product prices, the company said yesterday.
Infineon, which has a business year from October to September, said in a statement it had made a net loss of 371 million euros (US$323 million) in its third quarter, compared with profit of 23 million euros in the preceding three months and profit of 266 million euros in the April-June period a year earlier.
Earnings per share showed a loss of 0.59 euros in the third quarter, compared with a profit of 0.04 euros in the second quarter and profit of 0.43 euros in April to June 2000.
Earnings before interest and tax (EBIT) also showed a loss of 598 million euros in the third quarter, compared with a profit of 10 million euros in the preceding three months and a profit of 366 million euros a year earlier.
Infineon, a unit of Siemens, attributed the loss to "a sharp erosion in prices, especially for memory products, and the costs of currently unused capacity in most segments."
The loss "also reflects charges of 209 million euros in connection with inventory write-downs in all business sectors, except automotive and industrial, 30 million euros in acquisition-related expenses and 21 million euros in investments in a research and development venture," Infineon continued.
Third-quarter sales amounted to 1.28 billion euros, down 23 percent from the previous quarter and a drop of 30 percent from the corresponding period a year earlier.
Looking at the first nine months as a whole, Infineon said it sustained net loss of 68 million euros in the period from October to June, compared with profit of 545 million euros a year earlier.
EBIT also swung into loss of 142 million euros from profit of 863 million euros and nine-month sales were down six percent at 4.59 billion euros.
Chairman Ulrich Schumacher said that although Infineon had managed to grow faster than the market in the first half, market conditions deteriorated significantly in the third quarter "having a negative impact on overall business."
"Our balanced product portfolio did not help to ease the current weakness in the memory market. This and the magnitude of the current downturn, especially in communications, was not expected," Schumacher said.
Looking ahead to the full year, Infineon said that a further deterioration in market conditions in the semi-conductors sector during the third quarter and "no clear signs of a recovery in the coming months" meant that the company expected to post a net loss in the fourth quarter as a well as a loss for the full year.
The market conditions for memory products remained difficult, Infineon warned, with demand still weak, especially in the PC market, and no clear signs of recovery in demand for mobile phones.
Infineon said it had already implemented a range of measures to mitigate the financial impact of the current market slump, such as reduction in capital spending, as well as cost-reduction programs and a hiring freeze.
Infineon said it planned to use the 1.5 billion euros in proceeds from its recent capital increase to fund future capital spending and potential acquisitions.
"Our public offering, in combination with our lower capital spending for the current and next fiscal year and the cost-cutting measures already implemented, will enable us to continue to fund cutting edge research," said chairman Schumacher.
RSS