Moody's confirms STMicroelectronics

Moody's Investors Service said it confirmed the A3 senior debt ratings of STMicroelectronics NV and STMicroelectronics Finance BV and changed the outlook to stable from under review for possible downgrade.

The agency said the confirmation reflects the conclusion of STMicroelectronics' restructuring program for cost efficiency, improvement in asset positioning toward lower-cost locations, the company's strategy to reduce the capital intensity of its business, all of which should support margin stability, and the planned spinoff of the flash memory activities, which will relieve STMicroelectronics of margin dilution and a degree of cash flow volatility.

However, Moody's said the ratings continue to reflect STMicroelectronics' structural challenges, including a competitively less flexible European manufacturing base, foreign currency exposure to the weakening dollar, in which most semiconductor deliveries are billed, and the company's focus on semiconductors for high-end wireless applications, which see less growth currently than the mass market phones.

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