UPDATE 2-STMicro eyes growth in final 2010 quarter

Wed Oct 27, 2010 12:03am BST

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* STM net profit above expectations

* Company sees sequential growth in December quarter

* STM appoints new chief operating officer (Adds detail on new COO, background on chip demand)

SAN FRANCISCO, Oct 26 (Reuters) - European chipmaker STMicroelectronics (STM.PA) reported a higher-than-expected net profit in the third quarter and said sales would expand in the final three months of the year.

STM's results follow recent upbeat earnings reports from Intel (INTC.O) and Dutch chip maker ASML (ASML.AS), which raised investor hopes that the technology sector could end the year on a strong note. [ID:nN11136922] [ID:nLDE69B179]

STM, which makes chips for cars, computers, telephones and other consumer products, said sales in the final quarter of 2010 would likely rise between 2 percent and 7 percent sequentially.

"Even though in the third quarter the level of bookings in certain market applications softened from the very high levels in prior periods, we are encouraged by the level of our backlog in the fourth quarter," said Chief Executive Carlo Bozotti.

After strong sales in early 2010, chipmakers have wrestled in recent months with tepid demand and some have warned that growth in the last quarter will be less than in normal holiday quarters.

Global semiconductor sales could grow just 5 percent next year as the U.S. economy continues to struggle, according to market research firm iSuppli.

STM's sales in the third quarter were led by China and grew across all market segments except telecommunications.

Net profit was $198 million, compared with a net loss of $201 million a year ago and above analysts' expectations of around $183 million, according to Thomson Reuters I/B/E/S.

STM also said it appointed Didier Lamouche as chief operating officer, replacing Alain Dutheil, who is retiring.

STM's revenue in the quarter were $2.66 billion, up 16.8 percent over last year and in line with analysts' expectations of around $2.67 billion. (Reporting by Noel Randewich; Editing by Robert MacMillan and Steve Orlofsky)

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