STMicroelectronics (STM) has lowered its sales outlook for fiscal 2024 following declines in sales and net profit in the first quarter.
Nevertheless, the company's stock rose 1.7% in premarket trading on Thursday.
The company reported earnings per share (EPS) of $0.54 for the quarter, missing the consensus estimate of $0.63.
STMicro reported first-quarter revenue of $3.47 billion, an 18% decline, which was below analysts' expectations of $3.64 billion. Net income also fell, halving from $1.04 billion to $513 million.
Gross profit for the quarter decreased from $2.11 billion to $1.44 billion, resulting in a gross margin of 41.7%.
As a result, European semiconductor manufacturers have lowered their earnings forecasts for this year.
The company now expects annual sales to be between $14 billion and $15 billion, down from its previous forecast range of $15.9 billion to $16.9 billion.
Additionally, gross margins are expected to remain stable in the low 40s range, a change from previous expectations of low to mid 40s.
STMicroelectronics has set a revenue target of $3.2 billion and a gross margin target of 40% for the next quarter.
“We have been cautious about STM's current results, especially given the severe downturn in the company's general-purpose MCU business, which would result in significant reductions. However, the level of reductions exceeds our expectations. ” Jefferies analysts said in a note.
“We also do not rule out the possibility of pricing pressure on the channel's MCU business in the second half of 2024. We are likely at or near the bottom in terms of sales and margins, but in the second half of 2024 “We remain somewhat cautious about the slope of the recovery into 2025,” he added.
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Citi analysts said in comments on the report that they concluded that demand deteriorated “significantly” from the end of the quarter through April.
“We are seeking further details on this morning's call as to whether this is a grand but reduced number of legendary finals,” they wrote.
