Semi-conductor group Infineon issued a gloomy report on Dec. 2 for itself and its loss-making memory-chip unit Qimonda, and posted an annual loss of three billion euros (US$3.8 billion).
The company now expects sales to decrease by at least 15% during its 2008-2009 fiscal year that began in October and sees a "negative result" for the aggregate of its five divisions.
Infineon said that sales had gained just two percent to 1.153 billion euros in the last three months of its fiscal year, and that core earnings had fallen into a loss of 220 million euros from a 71 million euros profit in the previous quarter.
It added that "there can be no assurance that Infineon's plan to further reduce its interest in Qimonda will be successful" nor that Qimonda will be able to generate "adequate cash or result in desired operational efficiencies and cash savings." The group had hoped to divest Qimonda, in which it owns a stake of 77.5%, by February. In its last fiscal year, Infineon made a net loss of 3.1 billion euros, almost 10 times more than a year earlier and almost entirely the result of Qimonda. Qimonda is searching desperately for an investor and has also asked for public aid. Infineon has also dropped the idea of spinning off Qimonda by offering it to shareholders in the form of a dividend in kind.
Infineon said it would try to extend its cost-savings program that is designed to save 200 million euros per year and has already resulted in the loss of 3,000 jobs. "The company has identified very substantial additional savings," the statement said, though it would also likely mean a decrease in sales from the level expected up til now.
For 2009, "visibility is very limited. Infineon believes that a significant decline in global semiconductor revenues from 2008 levels cannot be ruled out."
Copyright Agence France-Presse, 2008