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STMicro Shares Rally as Profit Tops Forecasts

STMicroelectronics shares rallied as much as 7.7 percent on Wednesday after Europe's biggest chipmaker posted forecast-beating third-quarter profits in spite of the weak dollar.

The French-Italian chip maker generated net income of $187 million for the three months to Sep. 30 compared with $207 million a year earlier and expectations of $150.6 million based on a Reuters poll of 10 analysts.

STMicro shares were up 5.6 percent at 11.96 euros, making it Europe's biggest stock gainer. The European technology sector was up 0.8 percent at the time.

French broker Natixis Securities upgraded the stock to "buy" from "add" on the news.

Revenue during the period reached $2.57 billion, up 2.1 percent from the same period a year earlier and up 6.1 percent over the previous quarter -- at the high end of its outlook -- lifted by strong performances in wireless and computer products.

Earnings before interest and tax (EBIT) came in at 181 million, beating a Reuters forecast of $172 million.

Gross margin stood at 35.2 percent in the third quarter and the company said it expected gross margin to reach about 36.5 percent, plus or minus one percentage point in the fourth-quarter and sales to rise sequentially between 4 percent and 9 percent.