Infineon reports results for the second quarter and first half of fiscal 2007

» Full version of news release / PDF (incl. financial data) The main highlights of the fiscal second quarter were: Infineon group revenues for the quarter were Euro 1.96 billion. Revenues for Infineon excluding Qimonda were Euro 978 million. Infineon group EBIT was Euro 49 million. Excluding Qimonda, EBIT loss was Euro 28 million. Included in the fiscal second quarter EBIT were charges of Euro 54 million, mainly for restructuring and an asset write-down, partially offset by gains totaling Euro 25 million related to asset disposals and a revision to accrued personnel cost. Infineon group net loss was Euro 11 million, resulting in basic and diluted loss per share of Euro 0.01. For the fiscal third quarter 2007, Infineon expects revenues for its segments excluding Qimonda to increase, driven mainly by the Communication Solutions segment. EBIT for the segments excluding Qimonda and before charges is expected to improve as well, mainly due to lower expected losses in the Communication Solutions segment. Charges in the fiscal third quarter 2007 are expected to be insignificant. Munich, Germany, April 27, 2007 – Infineon Technologies AG (FSE/NYSE:IFX) today reported results for the second quarter and first half of fiscal 2007. Revenues were Euro 1.96 billion, down eight percent compared to the fiscal first quarter. Revenues of Infineon excluding Qimonda increased to Euro 978 million from Euro 958 million in the prior quarter. Infineon group EBIT decreased to Euro 49 million in the fiscal second quarter 2007, down from Euro 216 million in the prior quarter. Infineon excluding Qimonda experienced an EBIT loss of Euro 28 million in the quarter. EBIT loss included charges of Euro 54 million. These charges primarily consist of restructuring charges of approximately Euro 20 million for planned downsizings mainly in the Essonnes, France (ALTIS) manufacturing facility and in the company’s baseband business after the BenQ insolvency as well as an asset write-down of Euro 35 million. Those charges were offset in part by gains from asset disposals and a revision to accrued personnel cost totaling Euro 25 million. Net charges in the prior quarter were insignificant. Infineon group net loss was Euro 11 million in the fiscal second quarter 2007, resulting in basic and diluted loss per share of Euro 0.01. “We are satisfied with the direction but not with the absolute level of the business performance from Infineon excluding Qimonda during the fiscal second quarter. We expect to improve upon this level in the current quarter as the ramp-up of platform shipments in Communication Solutions, coupled with ongoing traction in Automotive, Industrial & Multimarket, should lead to improved EBIT before charges for Infineon excluding Qimonda,” said Dr. Wolfgang Ziebart, President and CEO of Infineon Technologies AG. “Longer term, we are planning for this trend to continue. For Infineon excluding Qimonda, we are targeting at least break-even EBIT in fiscal 2007 and are aiming for ten percent EBIT margin in fiscal 2009. In fiscal 2008, we expect to be well on our way toward this goal.” Outlook for the fiscal third quarter 2007 In the fiscal third quarter 2007, Infineon expects revenues for its segments excluding Qimonda to increase, driven mainly by the Communication Solutions segment. EBIT for the segments excluding Qimonda and before charges is expected to improve as well, mainly due to lower expected losses in the Communication Solutions segment. Charges in the fiscal third quarter 2007 are expected to be insignificant. Additional details concerning the outlook can be found in the respective segments’ sections. Segments’ fiscal second quarter 2007 performance and outlook Automotive, Industrial & Multimarket (AIM) In the fiscal second quarter 2007, the Automotive, Industrial & Multimarket segment performed better than originally anticipated. With Euro 741 million, the segment reported the highest revenues so far, a four percent increase compared to the prior quarter. EBIT was Euro 66 million. As anticipated, seasonal effects led to an increase in revenues and EBIT in the automotive business. The industrial & multimarket business performed slightly better than expected due to higher productivity in the company’s high-power products. Infineon’s security & ASIC businesses together were slightly lower than expected, despite strength in the chip card and security business, due to seasonal effects and general softness in the hard-disk-drive business. Automotive, Industrial & Multimarket’s outlook for the fiscal third quarter 2007 In the fiscal third quarter 2007, Infineon expects revenues of its Automotive, Industrial & Multimarket segment at least to remain at the high level of the prior quarter. The company expects EBIT developing in-line with the revenue development. Infineon anticipates that revenues and EBIT in its automotive business will be slightly up compared to the fiscal second quarter. Results in its industrial & multimarket business are expected to remain broadly on the same level as in the previous quarter, whereas some further postponement of demand for hard-disk-drives is expected to negatively impact the security & ASIC business. Communication Solutions (COM) As expected, fiscal second quarter revenues and EBIT in the Communication Solutions segment remained broadly unchanged compared to the prior quarter. Revenues were Euro 238 million and the EBIT loss was Euro 53 million. In the wireless business, the successful expansion of the mobile phone platform customer base strongly contributed to financial results as negative seasonality was offset by a strong increase in mobile phone platform shipments. Revenues in the broadband business remained relatively flat compared to the prior quarter. Communication Solutions’ outlook for the fiscal third quarter 2007 In the fiscal third quarter 2007, Infineon expects revenues of the Communication Solutions segment to increase strongly compared to the previous quarter, mainly driven by a significant increase in mobile phone platform shipments due to scheduled production ramp-ups for several major customers. The segment’s EBIT is also anticipated to improve considerably as revenues increase. In the broadband access business, revenues are anticipated to remain stable. The company continues to target break-even for its wireless business for the last quarter of calendar year 2007. Qimonda In the fiscal second quarter 2007, Qimonda’s revenues of Euro 984 million decreased from Euro 1.17 billion in the fiscal first quarter. EBIT declined to Euro 77 million compared to Euro 225 million in the prior quarter. Qimonda’s outlook for the fiscal third quarter 2007 Qimonda expects its bit production to grow by 8 to 12 percent in the fiscal third quarter 2007, mainly based on additional capacities from the 300-millimeter line in Richmond, USA, and the Joint Venture Inotera, Taiwan, as well as continued productivity improvements as a result of the conversion of more capacities to 80-nanometer technology and below. The company expects its share of bit-shipments to non-PC applications to be more than 50 percent for the fiscal third quarter and expects the trend of stronger demand for PC-related products to continue. Other Operating Segments Effective May 1, 2006, with the completion of the Qimonda carve-out, the Other Operating Segments primarily consist of revenues from Infineon’s 200-millimeter production facility in Dresden on sales of wafers to Qimonda under foundry agreements. EBIT in the fiscal second quarter included gains of Euro 3 million from asset disposals. Corporate and Eliminations Effective May 1, 2006, the Corporate and Eliminations segment reflects intra-group eliminations of the sale of wafers to Qimonda from the Infineon 200-millimeter production facility in Dresden. The EBIT loss in the fiscal second quarter 2007 was Euro 36 million, including charges of Euro 54 million. These charges primarily consist of restructuring charges of approximately Euro 20 million for planned downsizings mainly in the Essonnes, France (ALTIS) manufacturing facility and in the company’s baseband business after the BenQ insolvency as well as an asset write-down of Euro 35 million. Also included in the reported EBIT is a positive effect of Euro 22 million from a revision to accrued personnel cost. Net charges in the fiscal first quarter 2007 were insignificant. Other Operating Segments and Corporate and Eliminations’ outlook for the fiscal third quarter 2007 In the fiscal third quarter 2007, Infineon expects revenues and EBIT in Other Operating Segments and Corporate and Eliminations before charges to remain broadly unchanged relative to the previous quarter. Charges in the fiscal third quarter 2007 are expected to be insignificant. All figures are preliminary and unaudited. Analyst and press telephone conferences Infineon Technologies AG will conduct a telephone conference (in English only) with analysts and investors on April 27, 2007, at 10:00 a.m. Central European Summer Time (CEST), 4:00 a.m. Eastern Daylight Time (U.S. EDT), to discuss operating performance during the fiscal second quarter 2007. In addition, the Infineon Management Board will host a telephone conference with the media at 11:30 a.m. (CEST), 5:30 a.m. (U.S. EDT). It can be followed in German and English over the Internet. Both conference calls will be available live and for download on the Infineon web site at http://www.infineon.com Additional major business highlights of Infineon’s segments in the fiscal second quarter 2007 can be found in this document after the financial tables. D I S C L A I M E R This discussion includes forward-looking statements about our future business. These forward-looking statements include statements relating to future developments in the world semiconductor market, including the market for memory products, Infineon’s and Qimonda’s future growth, the benefits of research and development alliances and activities, our planned levels of future investment in the expansion and modernization of our production capacity, the introduction of new technology at our facilities, the continuing transitioning of our production processes to smaller structure sizes, cost savings related to such transitioning and other initiatives, our successful development of technology based on industry standards, our ability to offer commercially viable products based on our technology, our ability to achieve our cost savings and growth targets, and the continued development of the business of Qimonda as a stand-alone entity and any future corporate financing measures Infineon or Qimonda may undertake.. These forward-looking statements are subject to a number of uncertainties, including trends in demand and prices for semiconductors generally and for our products in particular, the success of our development efforts, both alone and with our partners, the success of our efforts to introduce new production processes at our facilities and the actions of our competitors, the availability of funds for planned expansion efforts, the outcome of antitrust investigations and litigation matters, as well as the other factors mentioned herein and those described in the “Risk Factors” section of the annual report of Infineon on Form 20-F filed with the U.S. Securities and Exchange Commission on November 30, 2006. As a result, our actual results could differ materially from those contained in the forward-looking statements. Infineon does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.