Infineon (IFNNY)

[mlkrborn]

3rd UPDATE: Infineon Swings To Profit, Raises View
Date : 01/29/2010 @ 11:07AM
Source : Dow Jones News
Stock : Infineon Technologies AG (ADS) (IFNNY)
Quote : 5.71 0.03 (0.53%) @ 8:26AM


3rd UPDATE: Infineon Swings To Profit, Raises View

By Archibald Preuschat
Of DOW JONES NEWSWIRES


DUESSELDORF (Dow Jones)
Chip maker Infineon Technologies AG (IFX.XE) became the latest European technology company to beat expectations and confirm the rebound in the sector, as it swung to a first-quarter profit and raised its guidance.

The Neubiberg, Germany-based company now expects sales in the year ending Sept. 30 to be up more than 20% compared with fiscal 2009, instead of its previous expectation for sales to rise more than 10%. It also raised its operating margin target to a high-single-digit range from a mid-single-digit range.

"Our outlook is not over-optimistic," Chief Executive Peter Bauer told reporters, adding that he expects orders in the next quarter to be above average.

Bauer also indicated that Infineon could exceed its fiscal-year sales guidance if the dollar strengthens against the euro. Infineon's guidance is based on an exchange rate of $1.50 to the euro.

Its improved earnings and outlook were welcomed by investors. At 1534 GMT, the shares traded up 4.3% at EUR4.07, outperforming a 2% gain in the benchmark DAX index.

Some banks raised their rating on the stock, among them Sal. Oppenheim, which upgraded its rating to neutral from reduce, saying the magnitude of Infineon's improved margin is a positive surprise.

For the current second quarter, spanning the January to March period, it expects sales to be around or slightly below first-quarter levels due to seasonal factors.

Total sales in the fiscal first quarter ended Dec. 31 climbed 27% to EUR941 million from EUR742 million a year earlier, adjusted for the sale of Infineon's wireline segment.

Infineon's sales performance was driven chiefly by a 17% quarter-on-quarter rise in the automotive segment. Revenue at its industrial and multimarket segment, which makes chips for machines, rose 6%, while wireless sales were up just 2%.

Infineon's wireless chips are used in cellphones and it counts Nokia Corp. (NOK), the world's largest handset maker, among its customers.

It remains unclear whether Infineon's chips have been included in Apple Inc.'s (AAPL) iPad Internet tablet, but its unveiling this week by Apple boss Steve Jobs generated some positive sentiment around the stock, nevertheless.

Infineon's strong first quarter and improved outlook is the latest in a string of positive earnings reports from European technology companies in recent weeks.

Nokia Thursday posted fourth-quarter profit that beat expectations as it boosted its share of the lucrative smartphone segment.

Earlier this week, STMicroelectronics NV (STM), Europe's largest chip maker, pared its losses in the last quarter of 2009 and Chief Executive Carlo Bozotti was upbeat about prospects for 2010.

Infineon swung to a net profit of EUR66 million in the quarter ending Dec. 31 from a net loss of EUR404 million a year ago after its bottom line was weighed by a EUR285 million net loss from discontinued operations at memory chip unit Qimonda. Infineon had a 77.5% stake in the unit, which filed for insolvency a year ago.

Infineon's bottom line was boosted by a EUR106 million after-tax gain from the disposal of its wireline business to Lantiq, affiliates of Golden Gate Private Equity Inc. The gain more than offset a EUR81 million charge due the deconsolidation of Altis, the company's joint venture with International Business Machines Corp. (IBM) in France.

Company Web site: www.infineon.com

-By Archibald Preuschat, Dow Jones Newswires; [phone]; [e-mail]