The company has reported net revenues of $1.82billion for Q1 2017, up 12.9% compared to Q1 2016, and a net income of $108million, which is $149m better than the same period in 2016.
And yet the company still seems to be muddling along. In late 2012, it announced a new corporate strategy intended to get it back up to speed following a dismal couple of years when it was wrestling with the ill fated joint venture with Ericsson. In the strategy, the company said it wanted to ‘rapidly achieve’ an operating margin of 10%, while targeting a significantly higher level of profitability by 2017.
The strategy attracted attention from financial company Bloomberg, which determined that ST would have to increase sales by 25% to around $10bn a year in order to achieve its goals. In its 2016 statement, ST reported annual revenues of $6.9bn.
ST also wanted to cut operating expenses by a third. One area which has suffered from these cuts is R&D, where investment has declined from $2.4bn in 2012 to $1.3bn in 2016.
Looking forward, chief executive Carlo Bozotti expects Q2 revenues to be 5% higher than in Q1. “Our objective for 2017 is to achieve sustainable revenue growth and margin expansion through our strategic focus on Internet of Things and Smart Driving. Our results in this first quarter are putting us on the right trajectory.”
Many lay the blame for ST’s woes squarely at Bozotti’s feet. The good news for those people is that Bozotti will only be around for another year. The promotion of long time ST employee Jean-Marc Chery from COO to deputy CEO suggests he’ll slip into Bozotti’s chair. Whether that will be good for ST remains to be seen.
