Infineon Beats Profit Expectations, to Cut Staff

Chipmaker Infineon said it would cut staff by 10 percent amid continuing tough market conditions even as it beat market expectations with a 97 percent rise in third-quarter core operating profit.

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AP

Infineon, Europe's biggest automotive chip supplier, said it aims to save at least 200 million euros a year, in part by cutting 3,000 jobs. It expects to record significant charges in the fourth quarter due to cost-cutting.

Operating profit at its core logic business advanced to 71 million euros ($111.2 million), mainly thanks to the sale of its HDD unit, which produced a gain of 41 million euros. But it posted a group net loss of 592 million euros.

Its shares were indicated down 3.9 percent before the Frankfurt market opens.

Sales at its core business, excluding memory-chip unit Qimonda, fell 2 percent to 1.029 billion euros due to a decline in revenue at its Automotive, Industrial and Multimarket (AIM) unit, Infineon said in a statement on Friday.

A Reuters poll of 14 analysts had on average expected earnings before interest and tax (EBIT) of 49 million euros and sales of 1.02 billion for Infineon's logic business.

Infineon said market risks in general are likely to rise and that the persistent weakness of the dollar against the euro was adding to normal price declines in the company's markets.

It forecast EBIT, excluding net gains or charges, to remain stable or decline in its fiscal fourth quarter.

Chief Executive Peter Bauer, who took over as CEO in June, wants to turn Infineon into a more efficient and leaner company.

On July 2 he announced that by October the company will have five chip divisions: automotive, industrial electronics, security, as well as fixed and wireless.

Infineon was spun off from engineering group Siemens to form a legal entity in 1999.