Infineon fell 25% to 1.6 billion euros, mostly on the performance of Qimonda QI. Excluding Qimonda results, it swung to a 65 million-euro profit:
LONDON (MarketWatch) -- Shares in Germany's biggest chipmaker, Infineon Technologies, dropped as much as 11% on Thursday as the group pared its outlook for microchips used for phones and broadband devices.
Infineon Technologies 623100IFX posted gloomy numbers during its fiscal first quarter, but they weren't a surprise. The company reported a loss of 396 million euros ($583 million) for the fiscal first quarter, against a profit of 120 million euros in the year-ago period, and a loss of 280 million euros in the Sept. 30-ending quarter.
Revenue at the Neubiberg-based firm fell 25% to 1.6 billion euros, mostly on the performance of Qimonda QI, the memory chip maker in which it holds a 77.5% stake, which has suffered from a downturn in prices for DRAM chips.
Analysts polled by Dow Jones Newswires expected a loss of 445 million euros on revenue of 1.63 billion euros.
Excluding Qimonda results, it swung to a 65 million-euro profit before interest and tax, with revenue up 14% to 1.09 billion euros.
The stock was down 11% in mid-morning trading, and now is down 26% this year.
Infineon gave a cautious outlook, even without the problems at the memory-chip division.
Second-quarter revenue from its automotive, industrial and multi-market segment will be flat on a sequential basis and communications solutions revenue will fall by a "mid-teens" percentage basis, Infineon said.
Infineon said volumes from making chips for mobile phones will be lower than expected, and broadband will stabilize on the "low level of the prior quarter." It expects to post a loss for this business during the fiscal year.
On a conference call, Infineon executives refused to identify the client or clients demanding fewer chips, more weakness than the typical seasonal behavior. Infineon's clients include Nokia NOK and LG Electronics.
The company previously said communications revenue would fall by single-digit percentage level and that it would manage a modest profit from the division.
For the year, revenue without Qimonda will grow by a high single-digit percentage, with a low to mid-single digit operating margin.
For fiscal 2009, Infineon is still shooting for a 10% operating profit margin, "but uncertain prospects for the global economy, the adverse currency development and the revised outlook are headwinds that make reaching this goal more challenging," said Wolfgang Zeibart, chief executive, in a statement.
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