Enter multiple symbols separated by commas

Infineon Profit Disappoints Analysts

German chipmaker Infineon missed expectations with a wider second-quarter operating loss for its core, non-memory units mainly due to charges relating to the insolvency of a major client.

Infineon said its EBIT (earnings before interest and tax) loss excluding memory unit Qimonda was 28 million euros ($38 million) in the quarter to end-March, compared with a loss of 9 million euros in the quarter to end-December.

The average expectation of 20 analysts polled by Reuters was positive EBIT of 4 million euros for the company's core business in chips for phones, cars and heavy industry.

The second-quarter results included net charges of 27 million euros, partly relating to the insolvency in Germany of handset maker BenQ Mobile.

Infineon shares were down 0.4% at 11.85 euros on Friday.

"They had a loss, which is back to business as usual, I'd say," said Sanford Bernstein analyst Scott Geels. "It's not a huge disappointment but a modest disappointment."

This quarter, Infineon said it expected higher sales and EBIT for its non-Qimonda businesses excluding charges, driven by its phone-chips unit, which is expected to reduce losses.

Charges were expected to be insignificant, it said.

Sales ex-Qimonda rose 2% sequentially to 978 million euros, beating the Reuters poll average of 967 million.

"We are satisfied with the direction but not with the absolute level of the business performance from Infineon excluding Qimonda during the fiscal second quarter," Chief Executive Wolfgang Ziebart said in a statement.

"We expect to improve upon this level in the current quarter," he said, adding the ex-Qimonda business should at least break even on an operating level this fiscal year.

Infineon's Automotive, Industrial and Multimarket unit increased EBIT by 20% sequentially to 66 million euros on sales that rose 4% to 741 million, beating expectations.

The Communication Solutions unit unexpectedly narrowed its EBIT loss to 53 million euros from 57 million the previous quarter and increased sales by 1% to 238 million, in line with forecasts.

Qimonda , which is still 86% owned by Infineon after a New York listing last year, reported disappointing results on Wednesday as average selling prices for standard DRAM memory chips used mainly in personal computers plunged.

The memory subsidiary, which brings in about half of Infineon's revenues, is expected to perform far worse this quarter as DRAM prices continue their downward slide. Infineon aims eventually to reduce its Qimonda stake to a minority.

Infineon trades at 1.1 times sales, according to Reuters Estimates, far below the 9.2 global semiconductor average, reflecting its low profitability and continuing high exposure to the DRAM business.

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • Jessica Alba

    The actress' company got burned after consumers came out in droves, saying the company's sunscreen doesn't provide much sun protection at all.

  • EON Sports VR

    Multiple NFL teams are now using virtual reality simulations to complement practice and, more importantly, keep players healthy.

  • What a robotic sniper might look like.

    A global arms race of robotic killing machines is inevitable if countries pursue autonomous weaponry, experts said.

U.S. Video

  • CNBC update: 400 lb grouper

    New York Attorney General Schneiderman announced retailers Wal-Mart, Sears and Amazon have agreed to keep realistic toy guns off their shelves, and a fisherman hooked a 7-foot, 412 pound grouper, reports CNBC's Sue Herera.

  • DC's fight against climate change

    President Obama is unveiling the first-ever limits on power plant carbon emissions today. Brian Deese, White House senior advisor, discusses emission targets, and investments in cleaner sources of energy to fight climate change.

  • Barnes & Noble spins off college bookstore

    Barnes & Noble is spinning off its college bookstore. Executive chairman Michael Huseby, says the company is aiming to stay relevant in the digital world.