No bone

21 October 2004 By Robert Cyran Follow @rob_cyran

The FrancoItalian chipmaker has bowed to reality and cut capital expenditure this year and next. But the group still hasn t recovered from past overinvestment. And the chip market could worsen.

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STMicroelectronics reported sales of E2.2bn in the third quarter, an increase of 3% compared to the previous quarter. Operating income at the FrancoItalian chipmaker came in at E213m, an increase of 19% over the same period.

The group also warned that fourth quarter sales growth would be slightly slower than originally expected. STM now expects sales to increase 0% to 5% for the fourth quarter compared to the third quarter.

Because of slowing sales growth, the group has reduced planned capital expenditure for the remainder of 2004. Originally slated for E2.2bn, it will now be cut by E200m. Next year's planned investment will be E1.5bn.

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