Infineon swings to loss

July 23, 2001 Posted: 1103 GMT

LONDON (CNN) -- German semiconductor maker Infineon on Monday swung to a third-quarter loss and issued a cautious outlook as revenues plunged 30 percent.

Infineon (FIFX) said it made an operating loss, including a one-time charge, of 598 million ($523 million) in the three months to the end of June compared with a profit of 366 million in the same period a year ago.

The company, which also said it was unable to issue a clear forecast as "visibility remains low", said the loss reflects charges of 209 million because of inventory write-downs in all parts of the business.

Infineon has fallen victim to tumbling global equity markets and profit warnings from rivals such as STMicroelectronics, as the U.S economic slowdown cripples European and Asian growth.

Infineon posted a net loss of 371 million, or 0.59 per share, compared with a profit of 266 million, or 0.43 a share in the same three months last year. Revenues dropped almost a thirtd to 1.28 billion.

But Europe's second-biggest semiconductor maker added it did not expect to make a loss in its 2001/2002 business year, after earlier forecasting negative earnings for the 12 months.

Infineon said it was also not likely to make a loss in the fourth quarter of its current business year as big as its third-quarter loss.

Its shares were down 2.2 percent at 26.71 in mid-morning trading in Frankfurt.

The company issued a profit warning a month ago, saying it would make a loss of $510 million and forecast third-quarter revenues diving by 30 percent on the previous quarter.

The company also announced on Monday it expects to raise up to 600 million from the sale of its stake in the Osram Opto Semiconductors unit it owns with parent Siemens.

Chief Executive Ulrich Schumacher said he expected the sale to go ahead in the first quarter of the company's next business year, Reuters reported.

He also said he did not expect its parent, telecoms to engineering conglomerate Siemens (FSIE) to sell further significant stakes in the company in the near term.

Siemens seeks to cut Infineon stake

Siemens owns 51 of Infineon following a recent capital increase in the chipmaker,  but has said it wants to cut its stake.

Infineon's share price has come under pressure amid market concerns Siemens could unload large numbers of shares.

Earlier, Europe's biggest chip designer, ARM Holdings (ARM), said second-quarter profit rose 23 percent from the sale of licences to use its technology.

Second-quarter net profit rose to £8.25 million ($11.8 million), or 0.8 pence a share, compared to a profit of £6.7 million, or 0.7pence, in the year earlier period.

The Cambridge-based company, which earns money from licensing designs and royalties for the use of semiconductors in mobile phones, handheld computers and cars, has seen its stock fall more than 56 percent this year.

ARM's share price shot up 12.8 percent to 226.5 pence in London, making it the leading gainer on the FTSE 100.

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