Morningstar Rating

Stock Research and Analysis

by Brian Colello, CPA

Bulls Say

Chipmakers with heavy automotive exposure, like ST, should profit from the secular trend toward more advanced electronics content in cars over the next few years.
ST believes it has captured meaningful design wins in upcoming TV set-top box designs, which should lead to significant growth in its digital chip business.
ST made some good moves to shed lower-margin businesses, like the ST-Ericsson wireless joint venture and stakes in two low-margin memory chipmakers, in recent years. Read more 

Bears Say

We are concerned about ST’s ownership by the French and Italian governments, which raises doubts as to whether it is truly focused on operating efficiency.
Despite being one of the largest chipmakers (by revenue) in the world, ST has not developed a massive scale advantage, as its gross margins and operating profits are below those of other successful analog chipmakers.
ST does not have a strong track record of generating excess returns on capital. The firm earned operating losses each quarter in both 2012 and 2013. Read more 

Management

We view ST as good stewards of shareholder capital. Carlo Bozotti has been president and CEO of ST since 2005 and has been with the firm since its formation. ST has a complex corporate structure that differs from the typical U.S.-based firm; 27.5% of   Read more 

Profile

A merger between Italian firm SGS Microelettronica and the nonmilitary business of Thomson Semiconductors in France formed STMicroelectronics in 1987. ST is a leader in   Read more 

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