Infineon: Preliminary results of first quarter show earnings below analyst expectations

Jan 12, 2005 | Business & Financial Press

Munich, Germany – January 12, 2005 – Infineon Technologies AG (FSE/NYSE:IFX) announced, based on preliminary figures available today, that it expects revenues and earnings before interest and taxes (EBIT) in the first quarter of fiscal year 2005 to be below market expectations. The company expects revenues of approximately Euro 1.82 billion and EBIT of approximately Euro 211 million. These numbers include the non-recurring license income of approximately Euro 118 million in connection with the settlement with ProMOS.

The Automotive & Industrial segment is expected to show revenues of approximately Euro 452 million and an EBIT of approximately Euro 50 million. Lower revenues combined with an active reduction in inventory levels resulted in a decline of fab utilization and EBIT margin.

Wireline Communications is expected to show revenues of approximately Euro 106 million and a negative EBIT of approximately Euro 29 million. The company anticipates no financial impact of yesterday’s termination of the agreement with Finisar and the related restructuring of the Fiber Optics business in the first quarter of fiscal year 2005.

Secure Mobile Solutions is expected to show revenues of approximately Euro 439 million and an EBIT of approximately Euro 2 million. In line with the outlook provided in the context of the company’s fourth quarter results announcement, results were influenced by reduced volumes due to inventory corrections at customers and lower than expected manufacturing utilization.

All logic segments were negatively affected by the sharp decline of the US dollar.

Revenues of the Memory Products segment are expected to be approximately Euro 766 million, EBIT is likely to be approximately Euro 196 million, including the non-recurring license income of approximately Euro 118 million in connection with the settlement with ProMOS. While bit production has slightly increased, shipments have declined due to an anticipated increase in inventory levels. Revenues and EBIT were negatively affected by the sharp decline of the US dollar.

The information reported above is based on preliminary results. Further analysis will be required to finalize the results for the first quarter. Infineon at present will not provide further information.

The company will announce details on the results of the first quarter of fiscal year 2005 as well as an outlook for the current quarter on January 24, 2005. The same day, Infineon will host a telephone conference with analysts and investors at 10:00 a.m. Central European Standard Time (CET), and with media at 11:30 a.m. (CET). Both conference calls will be available live and for download on Infineon‘s web site at http://www.infineon.com.

About Infineon

Infineon Technologies AG, Munich, Germany, offers semiconductor and system solutions for automotive, industrial and multi-market sectors, for applications in communication, as well as memory products. With a global presence, Infineon operates in the US from San Jose, CA, in the Asia-Pacific region from Singapore and in Japan from Tokyo. In fiscal year 2004 (ending September), the company achieved sales of Euro 7.19 billion with about 35,600 employees worldwide. Infineon is listed on the DAX index of the Frankfurt Stock Exchange and on the New York Stock Exchange (ticker symbol: IFX). Further information is available at www.infineon.com.

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 of the world semiconductor market, especially 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 transitioning of our production processes to smaller structures, 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, and our ability to achieve our cost savings and growth targets. 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, as well as the other factors mentioned herein. As a result, our actual results could differ materially from those contained in the forward-looking statements.

Information Number

INFXX200501.029