Moody's: STMicroelectronics outlook negative

Moody's Investors Service said it affirmed the Baa1 senior debt rating of STMicroelectronics NV and changed the outlook to negative from stable.

The negative outlook reflects the expected double-digit declines in both the semiconductor market and STMicroelectronics' revenues. Moody's said that while it recognizes STMicroelectronics' long track record of positive free cash flows and a solid liquidity position, revenue declines of more than 20% and very low factory utilization at least in the first quarter of 2009 may well result in substantial operating losses and cash consumption.

The agency said the Baa1 rating takes into account an expected stabilization of business for STMicroelectronics in the second half of 2009, the expected quick implementation of management's plans to downsize the company's cost base by more than $700 million annually and containment of anticipated cash consumption below $500 million cumulatively from the beginning of 2009.

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