Infineon Technologies AG

Earnings Release • Apr 23, 2008

News Details

Corporate | 23 April 2008 07:30

Infineon reports results for the second quarter and provides outlook for the third quarter and the 2008 fiscal year

Infineon Technologies AG / Quarter Results

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Infineon reports results for the second quarter and provides outlook for
the third quarter and the 2008 fiscal year

SECOND QUARTER 2008 RESULTS (January 1 to March 31, 2008)

in Euro million Q2 FY08 Q1 FY08 +/-
Revenues 1,049 1,090 (4%)
Infineon EBIT 36 65 (45%)
Income (loss) from continuing operations 19 45 (58%)
Income (loss) from discontinued operation, net (1,390) (441) ---
of tax
Net loss (1,371) (396) ---
in Euro
Basic and diluted earnings (loss) per share from 0.03 0.06 (50%)
continuing operations
Basic and diluted earnings (loss) per share from (1.85) (0.59) ---
discontinued operations
Basic and diluted earnings (loss) per share from _ _ +++
extraordinary loss
Basic and diluted loss per share (1.82) (0.53) ---

Neubiberg, Germany, April 23, 2008. Infineon Technologies AG today reported
results for the second quarter of the 2008 fiscal year ended March 31,
2008.

As of March 31, 2008, the financial reports of Infineon will focus on the
ongoing operations of the company while at the same time setting the
foundation for the comparability of its performance going forward. The
assets and liabilities of Qimonda have been reclassified as held for sale
in the condensed consolidated balance sheets, and the individual line items
in the condensed consolidated statements of operations reflect the results
of Infineon’s segments other than Qimonda. The results of operations of
Qimonda are reported in one line item titled 'Income (loss) from
discontinued operations'. In addition, earnings per share as well as the
statements of cash flows differentiate between 'continuing' and
'discontinued' operations. Following this reclassification, the investment
in Qimonda has been reduced to its current fair value less costs to sale,
resulting in a write-down of Euro 1.004 billion, which was recorded in
'Income (loss) from discontinued operations' in the second quarter of the
current fiscal year.

Infineon’s revenues in the second quarter of the 2008 fiscal year were Euro
1.049 billion, down four percent sequentially and up seven percent
year-over-year. The sequential decline reflects primarily negative revenue
seasonality in the Communication Solutions segment. Excluding effects from
currency fluctuations, primarily between the U.S. dollar and the Euro, and
acquisitions and divestitures, revenues declined two percent sequentially
and rose ten percent year-over-year.

Infineon EBIT was Euro 36 million in the second quarter, down from Euro 65
million in the prior quarter. Infineon EBIT in the second quarter included
net charges of Euro 8 million, mainly in connection with restructuring, and
Euro 5 million for the amortization of acquisition-related intangible
assets related mainly to the business acquired from LSI. Infineon EBIT in
the first quarter included a net gain of Euro 11 million, and Euro 9
million of such amortization expenses. For additional detail on net gains
and charges included in the Infineon EBIT, please see the table on page 9
of the press release. Net income from continuing operations for the second
quarter was Euro 19 million, translating into basic and diluted earnings
per share of Euro 0.03. For the first quarter, net income from continuing
operations was Euro 45 million, basic and diluted earnings per share were
Euro 0.06.

The net loss from discontinued operations was Euro 1.390 billion for the
second quarter. This loss included Infineon’s share in Qimonda’s net loss
of Euro 482 million, as well as a charge of Euro 1.004 billion from the
write-down of the carrying value of Infineon’s interest in Qimonda to its
estimated fair value. Basic and diluted loss per share from discontinued
operations was Euro 1.85.

For the second quarter, Infineon reported group net loss of Euro 1.371
billion, and basic and diluted loss per share of Euro 1.82.

The Automotive, Industrial & Multimarket segment reported in the second
quarter of the 2008 fiscal year revenues of Euro 741 million, broadly
unchanged compared to the prior quarter, due to the usual seasonal pattern,
and unchanged year-over-year. Excluding the effects of currency
fluctuations, primarily between the U.S. dollar and the Euro, and
acquisitions and divestitures, segment revenues increased nine percent
year-over-year and grew one percent sequentially. Segment EBIT was Euro 69
million compared to Euro 93 million in the first quarter. Net gains or
charges included in the segment EBIT for the second quarter were
negligible. Included in the first quarter segment EBIT was a gain of Euro
28 million from the sale of part of the company’s interest in its
high-power bipolar business.

In the Communication Solutions segment revenues in the second quarter of
the 2008 fiscal year were Euro 302 million, down 15 percent compared to the
prior quarter and up 27 percent year-over-year. Excluding the effects of
currency fluctuations, primarily between the U.S. dollar and the Euro, and
the contributions from the mobile phone business acquired from LSI and the
DSL CPE activities acquired from Texas Instruments, segment revenues
increased 10 percent year-over-year and decreased 15 percent sequentially.
Segment EBIT for the second quarter declined to negative Euro 29 million,
compared to negative Euro 11 million in the prior quarter, following the
revenue decline. Included in the segment EBIT for the second quarter was
amortization of acquired intangible assets of Euro 5 million relating
mainly to the mobile phone business acquired from LSI. Included in the
segment EBIT for the first quarter was a write-off of Euro 14 million for
acquired in-process R&D in connection with the acquisition of the mobile
phone business of LSI. Also included in the segment EBIT for the first
quarter was amortization of acquired intangible assets of Euro 9 million
relating mainly to the mobile phone business acquired from LSI.

Qimonda: For the second quarter, the net loss from discontinued operations
was Euro 1.390 billion. This loss included Infineon’s share in Qimonda’s
net loss of Euro 482 million, as well as charges of Euro 1.004 billion from
its write-down of the Infineon’s interest in Qimonda to its estimated fair
value, following the reclassification as held for sale. Basic and diluted
loss per share from discontinued operations was Euro 1.85 for the second
quarter. Infineon’s beneficial ownership interest in Qimonda as of March
31, 2008 was 77.5 percent.

'In the second quarter, we took a big step forward in our preparation for
the ultimate disposal and resulting deconsolidation of our investment in
Qimonda resulting in the re-classification as assets held for sale. In our
ongoing operations, we made solid year-over-year progress both in terms of
revenue and Infineon EBIT. That progress was achieved despite a materially
adverse development in the U.S. dollar-Euro exchange rate', said Dr.
Wolfgang Ziebart, President and CEO of Infineon Technologies AG. 'Last
quarter’s severe fall of the U.S. dollar against the Euro from about 1.45
to the current level of about 1.60, should it be sustained throughout the
entire 2009 fiscal year, would negatively impact Infineon EBIT for next
year by about Euro 120 million, based on our current revenue projections.
Reaching ten percent Infineon EBIT margin under such circumstances would
not be possible. Against this background, we have strongly accelerated all
margin improvement measures that we are implementing across the company. We
therefore see the potential, despite the significant currency hit, to
maintain EBIT margins in the Automotive, Industrial & Multimarket segment
at a high level and to achieve positive EBIT in our Communication Solutions
segment next year, excluding net gains or charges.'

OUTLOOK FOR THE THIRD QUARTER OF THE 2008 FINANCIAL YEAR
Although Infineon has hedged a significant portion of the cash flow impact
of the weakening exchange rate of the U.S. dollar against the Euro for the
2008 fiscal year, the exchange rate development is still negatively
impacting the top-line. For the third quarter of the 2008 fiscal year,
Infineon expects revenues to be flat to down slightly compared to the
second quarter. The company anticipates Infineon EBIT, excluding net gains
or charges, to decline from the prior quarter’s level, but to remain
positive, with low single-digit Infineon EBIT margin. In the third quarter,
Infineon expects to record a gain of approximately Euro 40 million from the
sale of the company’s hard disk drive (HDD) business to LSI.

Automotive, Industrial & Multimarket (AIM): In the third quarter of the
2008 fiscal year, Infineon expects revenues of its Automotive, Industrial &
Multimarket segment to decline by a low single-digit percentage compared to
the second quarter. The expected decline can be attributed predominantly to
the ongoing weakening of the U.S. dollar against the Euro and the expected
deconsolidation of the company’s’ HDD business. Segment EBIT margin is
expected to be in the range of 8.5 to 9.5 percent, excluding net gains or
charges. In addition, Infineon expects to record a gain of approximately
Euro 40 million from the sale of the HDD business to LSI. Revenues in the
segment’s automotive business are expected to remain broadly unchanged
compared to the second quarter. Sales in the industrial & multimarket
business are anticipated to be about flat. Results in the security & ASICs
business are anticipated to decline compared to the prior quarter, largely
due to the deconsolidation of the HDD business following its sale to LSI.
The transaction is expected to close in the third quarter. In addition, we
expect some normalization in demand for chip card ICs.

Communication Solutions (COM): In the third quarter of the 2008 fiscal
year, revenues in the Communication Solutions segment are expected to
increase by a mid to high single-digit percentage compared to the prior
quarter. This increase reflects mainly the scheduled production ramp-ups of
the company’s new HSDPA and EDGE mobile platform solutions. The broadband
business is anticipated to remain broadly unchanged compared to the second
quarter. Segment EBIT is expected to be approximately negative Euro 25
million, excluding net gains or charges.

Other Operating Segments and Corporate and Eliminations: In the third
quarter, Infineon expects revenues in Other Operating Segments to decline
compared to the prior quarter as shipments of wafers out of Infineon’s
200-millimeter wafer facility to Qimonda will come to an end during the
quarter. EBIT excluding net gains or charges for Other Operating Segments
and Corporate and Eliminations combined is anticipated to be approximately
negative Euro 20 million.

OUTLOOK FOR THE 2008 FINANCIAL YEAR
For the full year, Infineon maintains its previously announced outlook for
its continuing operations. In the Automotive, Industrial & Multimarket
segment, revenues and EBIT excluding net gains or charges are both expected
to decline slightly from 2007 fiscal year levels. In the Communication
Solutions segment, revenues are anticipated to increase 25 to 30 percent,
with low to mid single-digit negative EBIT margin excluding net gains or
charges. Infineon currently expects revenues to increase by a high
single-digit percentage year-on-year. Infineon EBIT in the 2008 fiscal
year, excluding net gains or charges, is anticipated to be positive with
low to mid single-digit Infineon EBIT margin.

All figures in this quarterly information 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 23, 2008, 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 second quarter of the 2008 fiscal
year. 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 conferences
will be available live and for download on the Infineon web site at
http://corporate.infineon.com.

Segments’ 2008 second quarter performance and additional major business
highlights can be found in the quarterly information at
http://www.infineon.com.

IFX FINANCIAL AND TRADE FAIR CALENDAR (*preliminary date)

• Jun 2/3, 2008 IFX Day: Annual Analyst and Investor Day

• Jul 25, 2008* Earnings Release for the Third Quarter of the 2008
  Fiscal Year

• Dec 03, 2008* Earnings Release for the Fourth Quarter and Full 2008
  Fiscal Year

• Feb 12, 2009* Annual General Meeting of Shareholders

New in the IFX podcast section at www.infineon.com/podcast

• Emergency Call for Cars

• Tuner: Basics

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 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 any potential disposal of
our interest in Qimonda. 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,
the success of any corporate activities we may undertake with respect to
our interest in Qimonda, 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 December 7, 2007. 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.

Contact:
Investor Relations, Tel.: +49 89 234-26655, Fax: +49 89 234-9552987

23.04.2008 Financial News transmitted by DGAP

Language: English
Issuer: Infineon Technologies AG
Am Campeon 1-12
85579 Neubiberg
Deutschland
Phone: +49 (0)89 234-26655
Fax: +49 (0)89 234-955 2987
E-mail: investor.relations@infineon.com
Internet: www.infineon.com
ISIN: DE0006231004
WKN: 623100
Indices: DAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Hannover, München, Hamburg, Düsseldorf, Stuttgart;
Terminbörse EUREX; Foreign Exchange(s) NYSE

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