On a sequential basis, all market segments posted growth, with Computer increasing by 22%, Industrial by 19%, Automotive by 19%, Consumer by 12% and Telecom by 1%. Distribution increased 35%, reflecting strong demand and improving market conditions. In comparison to the year-ago quarter, all segments increased except for Consumer and Industrial, down by 11% and 7%, respectively. Automotive was up by 23%, Telecom by 17% and Computer by 37%. Distribution increased 12% in comparison to the year-ago period reflecting the realignment of stock with demand and improved industry conditions.

Gross margin in the fourth quarter of 2009 was 37.0%, significantly higher than the 31.3% reported in the third quarter of 2009, due to higher volumes, increased fab loading and improved efficiencies. As anticipated, ST's manufacturing performance improved in the fourth quarter as the company continued to ramp towards, but has not yet reached full capacity. Gross margin in the year-ago period was 36.1%.

Combined SG&A and R&D expenses were $906 million in the fourth quarter of 2009, compared to $885 million in the prior quarter and $876 million in the year-ago quarter, which did not include the activities related to Ericsson Mobile Platforms. As anticipated, combined SG&A and R&D expenses in the fourth quarter increased reflecting a longer quarter as well as a negative currency impact but were partially offset by ongoing cost-savings. Combined operating expenses, as a percentage of sales, posted better than expected results as that ratio in the fourth quarter improved to 35.1% from 38.9% in the prior quarter.

In the fourth quarter, ST continued certain ongoing restructuring activities and headcount-reduction programs to streamline its cost structure. The Company's $1 billion savings and productivity plan, encompassing manufacturing, the rationalization of sites and capturing synergies in wireless, is about three-fourths complete at the end of the year. On December 3, 2009, ST-Ericsson expanded its restructuring plan, targeting additional annualized savings of $115 million in operating expenses and spending, along with an extensive R&D efficiency program. The targeted time of completion of this new plan is the end of 2010.

Related to the Company's cost-realignment initiatives, ST posted fourth quarter restructuring and impairment charges of $96 million, of which $61 million are related to ST-Ericsson. ST posted restructuring and impairment charges of $53 million and $91 million in the prior quarter and year-ago period, respectively.

Revenue and Operating Results by Product Segment

The following table provides a breakdown of revenues and operating results by product segment. Unused capacity charges are reflected in the segment "Others" in the respective quarters.