Shares of STMicroelectronics (NYSE:STM) plummeted more than 12% in pre-market today after the semiconductor firm revised its full-year outlook, now projecting revenues between $13.2 billion and $13.7 billion with an approximate gross margin of 40%.
The company reported net revenues of $3.23 billion for the quarter, a 25.3% year-over-year decline. While the gross margin matched forecasts at 40.1%, the operating margin fell sharply to 11.6% due to lower sales and higher operating expenses.
Jean-Marc Chery, STMicroelectronics’ President and CEO, noted that contrary to previous expectations, customer orders in the Industrial sector did not improve, and Automotive demand decreased. The drop in gross margins was attributed to shifts in product mix, price declines, and higher unused capacity charges.
Net income for Q2 fell to $353 million from $1 billion in the same quarter last year, and free cash flow declined to $159 million from $209 million year-over-year. Despite these challenges, the company announced a new $1.1 billion share buyback program.