Infineon Posts Eighth Straight Loss

Infineon Technologies AG on Tuesday posted its eighth consecutive quarterly net loss – E328 million ($356.5 million), triple its year-earlier loss – despite a 13 percent rise in revenue to E1.48 billion.

The company is the second-largest semiconductor manufacturer in Europe. Infineon and rivals in its main business – making memory chips for personal computers – have suffered through two years of depressed demand and falling prices. In the market for memory chips, only Samsung Electronics Co. has shown a profit for the most recent quarter.

Ulrich Schumacher, Infineon president and chief executive, told analysts during a conference call that while the company had improved its revenue and market share, it could not compensate for the dramatic decline in prices of memory products.

Infineon said that demand from computer manufacturers for memory – which accounts for more than 40 percent of the company’s sales – had picked up. But analysts warn that the outlook is dependent on corporate replacement cycles and increased investment in infrastructure.

Analysts said the results were laced with higher-than-usual extraordinary expenses, especially those for inventory depreciation. Onetime charges totaled E157 million in the quarter.

Andrew Griffen, a Merrill Lynch Co. analyst, said that when viewed on a “clean basis” – that is, without extraordinary charges – the loss per share was about 24 cents, or a slight improvement over the 25 cents Merrill had predicted.

“The revenues were better than analyst consensus,” another analyst for Merrill Lynch said. “We had expected E500 million in memory division revenues, which actually came in at E609 million.”

Viktor Dammann, financial analyst at Bank Vontobel in Zurich, said the “good news” was that the cost of making a 256-megabyte chip – including research and development, depreciation and sales channels – had dropped to E5.40, 50 cents lower than expected. “This was mainly due to a steep increase in production,” he said.

Infineon said memory-chip productivity had reached more than 6,000 wafer-starts per week after upgrading its state-of-the-art 300-millimeter facility in Dresden, which accounted for 40 percent of its dynamic random-access memory production in the quarter.