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Investing.com-- STMicroelectronics N.V. (EPA:STMPA) shares fell more than 7% on Thursday after the chipmaker issued a fourth-quarter sales outlook below seasonal trends, offsetting slightly stronger third-quarter results.
The company reported third-quarter revenue of $3.19 billion, broadly in line with expectations, while gross margin fell to 33.2%, below the 33.6% consensus estimate.
Operating margin declined to 5.6% from 6.2% expected, as a “product mix within Auto and Industrial” weighed on performance, Jefferies said.
Earnings per share were $0.26, above the consensus estimate of $0.22. Free cash flow totaled $130 million after $401 million in capital expenditures, while inventory days improved to 135 from 166 at the end of the second quarter.
“Though the sales momentum is below expectations, the gross margin guidance is healthy,” Jefferies added.
For the fourth quarter, the company guided revenue to rise 3% quarter over quarter to $3.28 billion, below Jefferies’ forecast of 6% and consensus of 5%.
The gross margin is expected to improve by 180 basis points to 35%, including 290 basis points of under-utilization charges.
Morgan Stanley described the outlook as “below seasonal,” noting typical sequential growth of 5-7% and citing continued “idle charges, currency and lower reservation fees” as drags on recovery. S
TMicroelectronics also lowered its 2025 capital expenditure plan to slightly below $2 billion from a previous range of $2 billion-$2.3 billion.
Kepler Cheuvreux, in research distributed by Macquarie, said third-quarter sales were “1% above expectations,” helped by stronger demand for personal electronics, particularly from Apple’s iPhone 17, which contained “higher semis content.”
The automotive and industrial businesses performed as anticipated, while analog, power and discrete, MEMS and sensors sales fell 7% on a like-for-like basis.
Within that segment, power and discrete products dropped 34% amid “depressed demand at Tesla” and slower silicon carbide activity.
The microcontrollers, digital ICs and RF products division grew 5% like-for-like, supported by a 9% rebound in embedded processing and improving inventories in Asia and China.
Adjusted operating margin declined 490 basis points year over year to 6.8%, about 40 basis points above Kepler Cheuvreux’s estimate.
For the fourth quarter, the research firm said management expected sales to be down 2% on a like-for-like basis, about 2% below consensus, with an adjusted gross margin “around 35%,” compared with 36.6% expected and 37.7% a year earlier. The outlook implies an adjusted operating margin near 7.5%, down from 11.1% a year ago.