Wireless chipmaker ST-Ericsson Friday reported a $125 million fourth quarter net loss as the company is still undergoing major restructuring and warned that the first quarter should experience a seasonal market decline.

The joint venture between Telefon AB LM Ericsson (ERIC) and STMicroelectronics (STM), which started operating in February 2009, said its operating loss was $139 million in the quarter ended Dec. 31. This compares with a pro-forma operating loss of $127 million in the same period last year.

The Geneva-based company said its restructuring plans are progressing on schedule but that the first quarter of 2010 should be characterized by "the usual market seasonal decline."

ST-Ericsson, the world's second-largest wireless chipmaker behind Qualcomm Inc.(QCOM) which supplies microchips to major cellphone makers such as Nokia, Samsung Electronics Co. (005930.SE), LG Electronics Co. (066570.SE) and Sony Ericsson, said the evolution of the market in the medium term is still difficult to predict.

"During its first year, the company has made good progress in all areas, but more still needs to be done," Chief Executive Gilles Delfassy said in a statement.

The company said the first $250 million cost-savings plan is now fully completed while its second $230 million savings plan has been progressing on schedule and is still due to be completed by the second quarter of 2010.

The latest cost-saving plan announced in December last year, which targets additional annualized savings of $115 million, should be completed by the end of the year, the company also said.

Restructuring charges totaled $62 million in the fourth quarter and ST-Ericsson expects the remaining costs associated with the ongoing restructuring plans to be incurred within 2010.

Sales for the quarter totaled $740 million, lower than the pro-forma $746 million figure the company provided for the same period last year but a 2% increase from the third quarter 2009, driven by demand in China.

The company didn't provide a pro-forma comparison for fourth quarter net profit.

 source:wsj