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Infineon Narrows Quarterly Losses

April 23, 2002

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FRANKFURT, Germany (AP) _ Infineon, the world’s fourth-largest maker of computer chips, narrowed its losses last quarter as demand for its key product picked up, the company said Tuesday, though warned that prospects for the next few months remain uncertain.

Munich-based Infineon, along with other computer and communications industry suppliers, has been struggling with a worldwide slowdown in business spending on new equipment that has seen chip prices plummet. But results from the first three months of the year showed the company has made progress cutting its losses.

The company lost $96 million in the January-March period, its fiscal second quarter. That compared to a $20.5 million profit in the same quarter the year before _ but represented a sharp improvement over a $294 million euro loss in the previous three-month period.

At its core chip-making business, the operating loss narrowed to $18 million from $330 million the quarter before, helped by a rise in the spot price of the 128-bit dynamic random access memory chip _ a staple of the industry _ to around $4 from around $1 late last year. On the same comparison, losses also shrank at its operations making parts for cell phones, cars and security-card systems.

``Infineon’s revenue performance was driven by the overall improvement of demand in all business groups and a strong increase in prices for memory products,″ chief executive Ulrich Schumacher said in a statement.

The results beat analysts’ expectations, helping the company’s shares gain 1 percent to $20.87 by midday on the Frankfurt stock exchange. The average forecast of ten analysts polled by Dow Jones Newswires was for a loss of $180 million.

Still, the company expressed caution about the months ahead.

``The market outlook for the next six months still remains somewhat uncertain and will depend on the extent and sustainability of the recovery of the world economy, particularly in Europe and the United States,″ Infineon said.

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