STMicroelectronics NV, Europe’s largest semiconductor maker, said fourth-quarter revenue and gross margin will miss forecasts after a slowdown in demand from the wireless, automotive and computer peripherals industries.

Sales will be $2.2 billion to $2.35 billion, down 13 percent to 18 percent from $2.7 billion in the previous quarter, the company said in a statement today. STMicroelectronics had predicted sales being unchanged or falling 8 percent. The gross margin will be about 38 percent, down from a forecast of 38.8 percent, both allowing moves of plus or minus 1 percentage point.

STMicroelectronics will cut output further to adjust to lower demand and reduce sourcing from third-party contractors. Because of the increased idle capacity, the Geneva-based company’s gross margin, or revenue left after subtracting manufacturing costs, will be lower than it predicted on Oct. 28.

“Our scenario for next year is already bearish but we cannot rule out further downside,” Odon de Laporte, an analyst at Cheuvreux in Paris with an “underperform” rating on the stock, wrote in a note today. The revenue slide may accelerate in the first quarter “as end demand is slowing sharply and a significant contraction in channel inventory is likely.”

STMicroelectronics fell as much as 43 cents, or 7.9 percent, to 5.01 euros and traded at 5.17 euros as of 10:21 a.m. in Milan. Before today, the stock had dropped 45 percent this year.

‘Weaknesses’

“This situation reflects the well-known weaknesses in the industry, across most geographies and market segments, and, in particular, in wireless, automotive, and computer peripherals,” STMicroelectronics said in the statement. “The Company continues to aggressively implement cost-control initiatives.”

Consumer electronics companies ranging from Nokia Oyj, STMicroelectronics’ biggest customer, to Panasonic Corp. have slashed their forecasts this month as consumers buy fewer mobile- phones, flat-panel televisions and computers.

This month, Intel Corp., whose chips run more than three- quarters of the world’s computers, lowered its fourth-quarter sales forecast, and Qualcomm Inc., the world’s biggest maker of mobile-phone chips, predicted earnings for the period that were lower than analysts had anticipated.

STMicroelectronics Chief Executive Officer Carlo Bozotti said Nov. 20 the company would outperform the global chip market, which is set to decline by 5.6 percent next year, according to the Semiconductor Industry Association. The association, in a Nov. 19 statement, also slashed its industry growth estimate for this year to 2.2 percent from a June forecast of 4.3 percent.

The company’s outlook published today is based on an exchange rate of $1.4 per euro. Most of STMicroelectronics’s revenue is in dollars, while 40 percent of production costs and 60 percent of research and general expenses are in euros.

Source:Bloomberg