Inventory was $1.33 billion at December 31, 2017. Inventory in the fourth quarter of 2017 was at 4.4 turns or 82 days compared to 3.9 turns or 92 days in the third quarter.
The Company paid cash dividends to shareholders of $54 million and $214 million for the fourth quarter and full year 2017, respectively. In addition, the Company launched and completed over the course of 2017, a share buy-back program of 18.6 million shares for an aggregate amount of $297 million.
ST's net financial position(1) was $489 million at December 31, 2017 compared to $446 million at September 30, 2017. At December 31, 2017, ST's total financial resources were $2.19 billion; total financial debt was $1.70 billion; and total equity, including non-controlling interest, was $5.47 billion.
In 2017, ST issued a $1.5 billion dual-tranche offering at 0% of new senior unsecured convertible bonds due 2022 and 2024. The proceeds, net of the cost of the share buyback, were partially used to early redeem, via net share settlement, both the 2019 and the 2021 convertible bonds issued in 2014 for a total of $1 billion and 26.8 million shares from Treasury stock. As of the end of the year, the Company has significantly reduced its overall cash cost of debt to 0.44%.
(1)Non-U.S. GAAP measure. See Appendix for additional information and reconciliation to U.S. GAAP.
First Quarter 2018 Business Outlook
Mr. Bozotti commented, "We exited 2017 with very strong revenue growth, and significant improvement in our operating profitability and net income. In 2018, our objective is to leverage our achievements to continue to drive sustainable and profitable growth thanks to our product leadership.
"We continue to see solid demand across product groups and geographies and in the first quarter we anticipate a better than seasonal trend for Smart Driving and Internet of Things applications, and the unfavorable seasonal dynamics for smartphone applications. Based upon that, as well as our much stronger than expected revenue growth in the previous quarter, we anticipate first quarter revenues to decrease by about 10% on a sequential basis, representing year-over-year growth of about 22% at the mid-point of our guidance range. We expect the gross margin to decrease to about 39.5% at the mid-point.
"In order to support our anticipated product portfolio mix and to fuel strong revenue growth in the second half of 2018 compared to the first half, we expect to invest this year approximately $1.0 to $1.1 billion."
The Company expects first quarter 2018 revenues to decrease about 10% on a sequential basis, plus or minus 3.5 percentage points. Gross margin in the first quarter is expected to be about 39.5% plus or minus 2.0 percentage points.
This outlook is based on an assumed effective currency exchange rate of approximately $1.18 = €1.00 for the 2018 first quarter and includes the impact of existing hedging contracts. The first quarter will close on March 31, 2018.
Recent Corporate Developments
- On November 22, ST has been awarded a position on 2017 "A" List for water and "A-" List for climate change by CDP, the non-profit global environmental disclosure platform.
- On December 12, ST announced its acquisition of software-development tools specialist Atollic for a cash payment of $7 million and a deferred earn-out contingent on certain conditions, which ST estimates will be about $1 million. Atollic is the supplier of TrueSTUDIO®, a professionally-recognized and highly regarded Integrated Development Environment (IDE) for the embedded development community focusing on Arm® Cortex®-M microcontrollers, like ST's market-leading STM32 family of 32-bit microcontrollers (MCUs).
Q4 2017 - Product and Technology Highlights
Automotive and Discrete Group (ADG)
- Won a major award with multifunction ASSP Umbrella-Chip for a transmission with a major European customer;
- Captured a design win with the latest Chorus SPC58 32-bit automotive MCU, which contains the most advanced security subsystem, in a high-end body computer from a leading European premium car maker;
- Earned multiple design wins for electrification - battery management, on-board chargers, and DC/DC converters - for SPC5 32-bit automotive MCUs with top Tier1s in China, Europe, and Japan;
- Landed several design wins for power-management ICs in ADAS applications with major European and Japanese players;
- Landed awards for VIPower family for mid-power DC motor control with award for mechatronic power-lift gates from a worldwide leader;
- Extended penetration among global mobile manufacturer leaders with qualification of single-line ESD protection devices with a major Chinese mobile phone maker;
- Qualified new generation of Transil(TM) avalanche diodes in flat SMD package with a major disk-drive manufacturer;
- Gained multiple design wins for 650V and 1200V SiC diodes for server, lighting and EV applications;
- Won several design-ins with 3rd-generation 1200V SiC MOSFET for main inverter applications from three key European automotive customers, while continuing to win awards for 2nd-generation 650V and 1200V for DC-DC converters and on-board chargers at key European automotive players;
- Recorded multiple wins for super-junction MOSFETs in on-board chargers, EV chargers, and LEDs for a switched-mode power supply with top manufacturers;
- Earned a design win and order for new IGBT in an electronic ignition from global leader;
- Awarded a design win for 2nd-generation intelligent power module from a leading Asian air conditioning supplier;
- Won a design for low-voltage MOSFETs for 48V DC/DC converter and parking-brake projects from leading automotive players;
- Introduced Telemaco3P, a dedicated telematics processor with built-in security, and an open development platform to secure car-connectivity applications.
Analog, MEMS and Sensors Group (AMS)
- Kept strong momentum with 6-axis ultra-low-power series in mobile phone market by winning several sockets at key players in China;
- Won sockets for waterproof pressure sensors with design wins and production launches at 1st tier wearables players;
- Captured new business award in Automotive to develop a high-accuracy inertial motion-sensing combo from a Tier1 player to address highly assisted driving function;
- Achieved record sales in Automotive sensing with strong contributions from car alarm and sensor-assisted driving systems; Ramped production of a new STSPIN motor driver with embedded 32-bit MCU for motion control in battery-operated robots and appliances;
- Began production of advanced wireless-charging IC that enables faster charging of smartphones and tablets;
- Launched new metering program with a major European provider;
- Introduced a System-in-Package that includes full-bridge MOSFETs, gate drivers, and protection devices;
- Won design with low noise low-drop out regulator from major Chinese smartphone makers;
- Captured design award for a new power-management IC for printers from a major player;
- Landed a design win for USB Type-C products from a French manufacturer.
Microcontrollers and Digital ICs Group (MDG)
- Acquired recognized Integrated Development Environment supplier Atollic to better support STM32 developers with powerful free design tools;
- Introduced STM32L4+ series of ultra-low-power microcontrollers with exceptional features and outstanding performance;
- Revealed that the STM32H7 series MCU combines new Platform Security Architecture from Arm® with advanced security features and services to boost protection for connected smart devices;
- Won slots for 15 STM32s in the bill-of-materials for a robotic lawn-mower platform at a key maker;
- Captured design wins for STM32L4 and L4+ in sport watches at a key OEM;
- Earned design-ins for STM32F103 in laptops as a touchpad controller from a major OEM;
- Landed wins for STM32F091 in the user interface for a consumer appliance at a leading OEM;
- Announced ST53G compact contactless module with boostedNFC(TM) Technology, extending secure payment to wearables; the module was a Trustech 2017 Sesame Award finalist;
- Revealed the ST25 NFC Tags have been certified by the NFC Forum and launched Software Development Kit for ST25 tags and dynamic tags;
- Began production ramp of ST25DV for an asset-tracking application at a major OEM and of an eSIM solution based on the latest ST33J 40nm Secure Micro in a tablet from a leading OEM;
- Ramped production of 2 new ASICs in 55nm BiCMOS for a key optical networking OEM.
