STMicroelectronics N.V.’s (STM) results include the impact of consolidation of its joint venture with Telefonaktiebolaget LM Ericsson (Ericsson), ST-Ericsson, from 02 February 2009, rendering our estimates incomparable. The company’s 1Q 09 performance has deteriorated significantly, as anticipated, reflecting the impact of declining demand for semiconductors. In its 1Q 09 press release STM announced that ST-Ericsson has started a new cost saving program which…

Although the company has successfully increased its market share over the past few quarters, pruning its product portfolio to exclude under-performing business and improving focus on its core business lines through wireless expansion, further contraction in end-market demand in the Automotive, Computer peripherals, consumer goods and Mobile equipments markets is expected to result in a continued steep decline in net revenues in 1Q 09....

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STMicroelectronics N.V.’s (STM) ADR price has declined substantially since our 3Q 08 update report, which we believe reflects investor reaction to declining semiconductor demand given slowing levels of consumer spending as well as general weakness in equity markets. Given these prevailing conditions in the semiconductor industry, we maintain our cautious fundamental outlook, and therefore reiterate our HOLD rating although the target price no longer…