Wednesday October 21, 03:05 PM
UPDATE 1-ST-Ericsson says strong euro makes break-even tough
* Chip-maker posts $121 mln operating loss
* Says strong euro making break-even tougher
* Says market visibility poor
STOCKHOLM Oct 21 (Reuters) - Loss-making chip maker ST-Ericsson (Stockholm: ERIC-B.ST - news) said on Wednesday it would break even on sales of $750-$800 million, but that a stronger euro was adding to difficulties in reaching that target.
Chief Executive Alain Dutheil said break-even depended on raising its sales and the completion of restructuring plans.
'Euro-dollar is another parameter,' he told a conference call after the company published its third-quarter results.
'We are seeing a stronger wind blowing. Anyway if it is a long-lasting headwind, we will have to take some additional measures,' he added.
The company reports in dollars, but a substantial portion of its costs are in euros.
ST-Ericsson, which competes with Qualcomm (NASDAQ: QCOM - news) and Texas Instruments (NYSE: TXN - news) , said that its break-even sales level had been calculated based on the dollar at 1.35 to the euro. On Wednesday, the dollar was around 1.49.
ST-Ericsson, a joint venture of Sweden's Ericsson and Franco-Italian chipmaker STMicroelectronics, reported a third-quarter operating loss of $121 million on net sales of $728 million late on Tuesday.
It said a first phase of restructuring aimed at cutting $250 million from operating expenses was substantially completed at the end of the period.
A second step, announced in April to reduce a further $230 million of costs will boost results from around the start of 2010, the company said.
The company did not give an outlook, but Dutheil, who steps down as CEO at the start of November (Frankfurt: A0Z24E - news) , said the market would likely follow usual seasonal patterns.
'Usually the fourth quarter is pretty flat compared to the third quarter, he told reporters and analysts.
'Usually Q3 is a strong quarter to prepare for the Christmas sales. So this is what we see from the market. That's the only guidance I can give.'
Joint-parent Ericsson reports its third-quarter results on Thursday. Qualcomm's full-year result is on Nov. 4.
(Editing by Mike Nesbit) Keywords: ST ERICSSON/
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