Tait Sorensen – Director, IR Carlo Bozotti – President and Chief Executive Officer Carlo Ferro – Executive Vice President and Chief Financial Officer Carmelo Papa – Executive Vice President, Industrial and Multi-segment Sector

François Meunier – Cazenove Andrew Gardner – Barclays Capital Stephane Houri – Natixis Jonathan Crossfield – Merrill Lynch Martino De Ambroggi – Equita SIM Glen Young – Citi Odon de Laporte – Cheuvreux Tristan Gerra – Robert Baird Kai Korschelt – Deutsche Bank Mark Lipacis – Morgan Stanley

Good morning or good afternoon. I am Dino, the Chorus Call operator for this conference. Welcome to the STMicroelectronics Third Quarter 2009 Earning Results Conference Call and live webcast. Please note that for the duration of the presentation, all participants will be in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. (Operator instructions) At this time, I would like to turn the conference over to Mr. Tait Sorensen, Director, Investor Relations. Please go ahead, sir.

Thank you, Dino. And thank you for joining our third quarter 2009 conference call. Hosting the call today is Carlo Bozotti, ST's President and Chief Executive Officer. Joining him on the call are Carlo Ferro, Chief Financial Officer; Philippe Lambinet, Executive Vice President of Home Entertainment and Display; and, Carmelo Papa, Executive Vice President of the Industrial and Multi-segment Sector. This call is being broadcast live over the web and can be accessed through ST's website. A replay will be available shortly after the conclusion of this call. The call will include forward-looking statements that involve risk factors that could cause ST's results to differ materially from management's expectations and plans. We encourage you to review the Safe Harbor statement contained in the press release that was issued with the results last night and also in ST's most recent regulatory filings for a full description of these risk factors. As a reminder, please limit yourself to one question and a brief follow-up. And now, I'd like to turn the call over to Carlo Bozotti, ST's President and CEO. Carlo?

Well, thank you, Tait, and good afternoon, and good morning. And thank you for joining us on today’s conference call. As you have seen from our results, the third quarter was a period of progressive improvement in most areas for ST. Revenue grew, gross margin expanded, cash flow improved, and our net financial position strengthened. As we move into the fourth quarter of 2009, we are beginning to reach some important targets of our transitional financial model. At the same time, we still have some areas where we like to see a faster rate of progress, which I will follow in greater detail later in the call. Now, let's move to a review of the quarter. First, from a revenue perspective, we had a very solid performance coming in at the high-end of our targeted range with 14% sequential growth. As you recall, we came in above the high-end of our internal plan last quarter. So, we have had two very solid quarters, where improvement in bookings activity translated into higher sales. The sequential revenue improvement was evident across all the market segments. Computer and automotives led with 21% and 18% growth, respectively, followed by telecom and consumer. Distribution was up 20%, on the better alignment of our inventory in that channel to the increasing demand levels driven by improved market conditions. Importantly, on a regional basis, the strength we saw last quarter in Q2, in greater China and in Asia-Pacific has began to expand to other regions of the world, in particular America and Europe. Looking at the numbers, revenues in Asia-Pacific and greater China grew 20% and 15%, respectively. America grew 14% and Europe 9%. Also Japan improved sequentially, but it somehow lagged behind other areas with its 4% revenue growth. We are also excited about the opportunities with other new key customers. Revenues from new key customers increased sequentially 29% in the third quarter. .: In wireless, at the end of Q3, ST-Ericsson had shipped over 3 million commodity units of the TD-SCDMA devices. Third, we have been aggressively managing inventory in order to bring it into alignment with market condition. Based upon our excellent progress, during the third quarter, we registered inventory turns within our targeted range of 4.5 to 5 times. Year-to-date, we have reduced our inventory by $541 million. While having completed this space of our inventory adjustment affecting fab loading, we will continue to focus on accelerated inventory turns. Weak industry conditions as well as our inventory management effort have negatively impacted our gross margin. As reported gross margin was 51.3% in the third quarter compared to 37.7% in the year ago quarter excluding the inventory step up related to the former NXP wireless business? Under loading charges and volume inefficiencies represented a negative impact to gross margin of 6.5 percentage point followed by means described. These negative influences were partially offset by the strengthening of the dollar and the benefits of the formation of the Wireless JV with Ericson. However, on a sequential basis we were pleased to report a strong improvement compared to the 26.1% in the prior quarter. This significant sequential improvement was in line with our expectation and reflected better fab loading. Fourth, cash flow is a key area of focus. Our goal had been to return ST to positive quarterly cash flow in 2009, and now it is to deliver an overall positive net operating cash flow for 2009. In the third quarter, we expanded our cash flow from operations. Specifically, during the third quarter net operating cash flow excluding M&A was $100 million, up from $45 million in Q2 and up from a negative $139 million in Q1 2009. Importantly, I think this demonstrates the strength as well as the significant progress that we have made in the various strategies impacting cash flow. As a result, during one of the worst global recessions and one of the most rear cycle downturns ever for the semiconductor industry, ST is sustaining a positive net operating cash flow for the year. This flow is one of the key financial targets of our transitional financial model and excluding payments for restructuring we are expecting net operating cash flow of at least 6% of sales in the fourth quarter. Fifth, we have strengthened our capital position over the course of this year. In the first quarter, we turn a net debt position into a net cash position, thanks to M&A activities. In the second quarter, we returned to generating net cash even within an extremely tough economic environment. In the third quarter, we accelerated our cash generation to past, at the end of September a net cash position of $266 million. This amount represents a net improvement of over $800 million since year-end 2008 where we had a net debt position of $545 million. And we continue to expect further improvement in the fourth quarter. As I mentioned earlier, we have some areas in which we still need to improve, in particular we need to accelerate the capturing of operating expense savings even more in light of the deteriorating currency environment. Indeed, we have essential urgency related to this issue and we are committed to this effort. At this point, I would like to give you an update on our three major head count reduction programs impacting operating expenses in our organization including the ST-Ericsson JV. The restructurings are unfortunate as they impact people, but this is something we must do. The first set of initiatives involves approximately 750 people at ST where we are about 70% complete, with the remainder expected at year-end. The second initiative is the phase I of ST-Ericsson restructuring programs that was related to ST-NXP Wireless. This program involved approximately 500 people plus the equivalent of over 850 people retained by NXP but temporarily charged to ST under transitional service agreement and was substantially completed at the end of September. The third program approximately 1,100 people net, is phase II of the ST-Ericsson program, which is currently in progress and is expected to be completed by May 2010, but had a very limited benefit to the third quarter result. Turning to our outlook, we believed the final three-months of the year are shaping up to be a stronger than seasonal quarter for ST. Based upon our backlog and visibility, we expect IMS to grow faster than the company average, boosted by strong growth microcontrollers, Smartcard, and across all families in advanced analog power and MEMS. Within ACCI, we are anticipating important growth to continue to come from automotive and from digital consumer, where the economic recovery and new products will drive growth in contrast to normal, seasonal, digital consumer patterns. We would expect wireless to show a normal seasonal pattern. In combination, this leads to potential sequential revenue growth of about 5% to 12%, representing a revenue range of about $2.39 billion to $2.55 billion. After a year of negative year-over-year result, we expect the company to return back to positive year-over-year comparisons in the fourth quarter, as the midpoint of our revenue guidance is about 9%. : We also see an improving operating expenses to sale ratio as we move into the fourth quarter. SG&A and R&D cost would be slightly higher on a sequential basis, reflecting the impact of the stronger overall, as well as an increased number of days in Q4, in comparison to the third quarter. However, thanks to further progress in executing the ongoing restructuring initiatives, we should be able to largely mitigate those impacts. As a result, we expect higher sales to translate into a substantially lower operating expenses to sales ratio in the fourth quarter, compared to that of the prior quarter. In summary, we believe the worst of the economic crisis is behind us, but for the first time the semiconductor industry will register a decline in revenues two years in a row. During this time frame, we have remained focused on our key priorities, which have helped us to navigate the downturn and strengthen the company in comparison to one year ago. Importantly, we continue to emphasize our cash generation and this is evident in our capital expenditure levels, inventory progress, cash flow from operations, and positive net cash position. In the last nine months, we have limited CapEx to $261 million, achieved an inventory reduction of $541 million, returned to $100 million in operating cash flow from a negative of $139 million in Q1, and improved our net financial position by our $800 million. : 2009 has been an important year for product and technology innovation. We are building a stronger product portfolio and we continue to focus on accelerating our products time to market. This year we have made significant progress in many product areas. I would like to highlight just a few. Our progress in 32-bit microcontrollers in the industrial, Smartcard and automotive markets has been rewarding. We have received very positive feedback from customers on our product offering. In automotive we are developing energy saving products and we are renewing our commitment to developing innovative solutions for hybrid and electric vehicle. In MEMS we have tremendous opportunities for growth as we have new families of gyroscopes and active microphones targeting a wider base of customers in very high volume applications. In healthcare we are developing the market and have good opportunities, for example with our low-power sensors offering world-class performance. Additionally we’re ramping shipments of analog controllers and power MOSFET for power management in computer motherboard and we are benefiting from the expanded range of our competitive high-voltage power MOSFETs or switch mode power supply. In digital consumer we are now shipping our advanced 55-nanometer, low power technologies for set-top box and we gain design wings in multiple markets for set-top box platforms including several top gear telecom and cable operators for their deployment of high definition TV. Computer peripherals have improved enormously expanding the geography of these customers with advanced product solutions in hard disk drives. And in wireless customers and partners have well advanced – have with advanced product solutions in hard disk drives. In wireless customers and partners have been endorsing ST-Ericsson interactive solution portfolio. The JV is experiencing good momentum with key customers for the U-8500. The industry first open OS 3G HSPA single chip smart phone platform. Recently ST-Ericsson also reinforced strategic relationships with key players in the computing marketing such as Dell, centered around their modern portfolio. Before moving to questions, I would like to highlight the evolution of some key management position. After successfully leading ST-Ericsson, Alain Dutheil will be returning full time to his position as ST Chief Operating Officer. Alain succeeded in the difficult job of integrating the operation through the initial phase of the formation of our two wireless JVs over the last 15 months and we thank and congratulate him. Taking over as COO of ST-Ericsson is Gilles Delfassy, a wireless industry veteran with the right goal of success. We welcome Gilles to his new position on November 2. In automotive Ugo Carena is retiring and Paul Grimme just moved to transition period is now taking over as the new General Manager of APG. Ugo has been instrumental in the development of the automotive products group and I would like to express my deep appreciation for his dedication all along this past years for the benefit of the company. And we welcome Paul to his new position. With that my colleagues and I are now available to answer your question.

We will now begin the question-and-answer session. (Operator Instructions). The first question is from Mr. [inaudible] of Nomura. Please go ahead sir.

Yes, hello. Thanks for taking my question. If I look on the savings plan, you've announced seven programs of which five are related to OpEx, which in the previous call talked about the ST-Ericsson Phase I and Phase II program. So, I was wondering whether we could quickly go through the remaining three programs, and just say, where would you stand today? And the first one would be the rationalized OpEx program where you said you would save about 140 million by year-end.

Absolutely, so I think we have all the details here and Carlo Ferro will cover this portion.

Yes, good afternoon and good morning everybody. Thank you for the question [Guna]. So, it has to address those of the CT program on the ST part and also on the benefit of all the audience to wrap up on those of our ST-Ericsson as they affect the consumer obviously. So, the first block is the ST plan in the OpEx area. You may remember that this is addressing 750 head count and targeting $140 million of annualized savings. This plan at the end of September is accomplished by 70%. The balance will be completed at the end of December 2009, and I would say that this will be more a bullet event at the end of the year, due to the adoption of certain instrument that occur with the close of ST's carrier. : : I will remember that this plan target and is achieving $250 million of savings per year. Then we have the Phase II of the ST-Ericsson plan and this is addressing 1,100 net head count, targeting $230 million of savings per year. As our colleagues of ST-Ericsson said, during the call, the plan has just started, is progressing, but most of the head count reduction is expected to occur in the first half of 2010. Indeed at this stage on – at the end of September, only 40 head count exited in the Phase II plan and then, you know this is a very important, this is targeting $230 million savings per year. So, ST-Ericsson has over $200 million annualized cost of reduction out of Phase II that still has too much to materialize in their profit and loss and in the profit and loss income statement of the ST consolidated. And you have for sure noted that the comments from ST-Ericsson management reaffirming that the plan will be completed by mid-2010. So, in this respect as shareholder of ST-Ericsson, we are anxious to see this very substantial improvement in the cost structure, partially in Q4 and for the largest portion in the first half of 2010. : I will remember that this plan target and is achieving $250 million of savings per year. Then we have the Phase II of the ST-Ericsson plan and this is addressing 1,100 net head count, targeting $230 million of savings per year. As our colleagues of ST-Ericsson said, during the call, the plan has just started, is progressing, but most of the head count reduction is expected to occur in the first half of 2010. Indeed at this stage on – at the end of September, only 40 head count exited in the Phase II plan and then, you know this is a very important, this is targeting $230 million savings per year. So, ST-Ericsson has over $200 million annualized cost of reduction out of Phase II that still has too much to materialize in their profit and loss and in the profit and loss income statement of the ST consolidated. And you have for sure noted that the comments from ST-Ericsson management reaffirming that the plan will be completed by mid-2010. So, in this respect as shareholder of ST-Ericsson, we are anxious to see this very substantial improvement in the cost structure, partially in Q4 and for the largest portion in the first half of 2010.

Thank you. And Carlo you spoke about the Q4 OpEx, I mean could you may be clarify or be bit more specific what we should look at the OpEx line in Q4?

Yeah, I think Carlo will take again. I mentioned qualitatively. I think there will be a significant leverage, but I prefer Carlo gets into some more details here.

Yeah, here we have also some technical ingredient that Carlo has mentioned in his introduction, you know the company is adopting a calendar, a quarterly calendar based on 13 weeks, but closed the fiscal year on December 31st and since – unfortunately the number of weeks in the calendar is not always a closing on – on a Saturday, we always incur for the quarter, which is from how longer than the prior quarter, and the Q1, which is somehow short than the following quarters. So, in this respect this year, the calendar effect is quite consistent. :

Thank you.

Good.

Next question Dino.

.: François Meunier – Cazenove: :

Yeah first of all the comment of Carlo that just made for Q1 refers to $1 at 150. So this is for Q1

That's the range.

-: François Meunier – Cazenove: Okay. Thank you very much.

Maybe…

Operating income and not expenses.

Maybe just as a complement let me also add some consideration on the first part of your quick reference why about the cost structure of course you may have noted that in the last three years we have moved about 10 points of our cost structure for out of the euro area and into the dollar areas. Then and we are continuing on these of course, whether meanwhile also the integration while as have occurred they of course have a lot of strategic and volume added for the company for our shareholders for sure. They have not have in respect to the natural hedge in respect to the euro-based presence of [inaudible] NXP wireless and the Ericsson Mobile Platform businesses. The restructuring plan that ST-Ericsson is recruiting is also somehow addressing the cost structure in these the currency respect. And this is somehow the reason why the exposure and the sensitivity remains as Carlo said very similar to the one of the fair quarter. This is I'll say as low progression, I appreciate every quarter on updating on this respect, but of course we cannot have break through changes in three months on this respect. What is important going forward maybe also the current and outstanding hedging that are quite comparable on this respect. For Q4 we are hedged at about $1.37 per euro for the portion, which is more than half of expenses in euro, which is covered for Q1 we have at this point basically hedged 40% of expenses at the rate, which is in the range of 1.38 in expenses, 114 cost of goods sold and of course we have also started to go cover somehow to two equity. François Meunier – Cazenove: Okay. Thank you very much, Carlo.

Thank you, François. François Meunier – Cazenove: Can I just – quick question about the Q4 again if I may?

Sure, sure. François Meunier – Cazenove: Inventories are gone up earn out in the first three quarters and that's – that's a very good achievement from your side. Do you expect inventories to grow up again in Q4 and maybe linked to that have you seen any sign of customer trying to give and order some of your components?

Well. I think, we want to improve inventory turn. I think we have done a big effort here, a painful, but I think we have done it and moving forward, we want of course to maintain the focus very strongly with the target to improve our stock turn. Okay, as far as the market because the second question is really the market. I think, frankly, we do not count on all the orders that we have today on Q4. I just want to be clear, I mean, we were at the level of $2.7 billion in Q3 last year. And of course we’re very, very keen to go back to that level of revenues quickly, but we are not yet there and the visibility that we have today is more in the range of $2.5 billion, in fact the mid point is $2.47 billion. And I think for sure there is some speculation and we believe whoever that – we do not count these form of speculations neither in the Q4 guidance that we’re giving nor the run rate of the business that we see for Q1 and Q2 next year. But of course our motivation is to go back very quickly to the $2.7 billion per quarter that we are in Q3 – in Q3 last year. So, the 2.5 or so is a passing point. Looking at the backlog, we could do more, I think there are some speculations, for instance there are areas like the notebooks. I just visited Asia and there are areas like in the notebooks and for us of course is mostly computer peripherals, in some power supply and similar. Whether is a degree of other EBIT situation, but we do not count on those.

Okay. Okay, that's good.

Thank you.

Thanks [inaudible]. Next question Dino.

The next question is for Mr. Andrew Gardner of Barclays Capital. Please go ahead sir. Andrew Gardner – Barclays Capital: Thanks, very much. I just wanted to clarify some of the statements regarding the transitional model and where you see things in fourth quarter. Just to be clear the – what you had outlined in May, the capital markets there was that if you were to hit that $2.3 billion to $2.4 billion revenue marks that all segments would be at or above break even?

Yeah. This is what we said indeed. Well, I think of course we should talk in the company before the segments. I think as you know, we do not give formal guidance for operating income and it was not in the press release and we’re not to give a formal guidance of course in the conference call. But what I can say that we are encouraged by the progress in the top line and that is better than what we talked in New York, but also very encouraged by the progress in the gross margin. By the way, the gross margin of Q4 is a significant improvement compared to what we had in Q3, but is not enough. We understand this is not enough. And I believe that particularly in the second half of next year, by continuing with our strategy in controlling capital investment that we are doing and I think we have potential full expansion there. In any case, we are encouraged by the progression of the top line and also by the progression of the gross margin to allow us to go back soon in Q4 of this year to some level of profitability. Now, if you go to the segment, I think there are some – there are two blocks in the company, and I would like to present in this way. There is a big block that of course is ATM and MMS. They're now back big way with – in terms of revenues and in terms of also new products and this for sure will post a very material profit in the course of Q4 of this year. Then there is the other block of the company that is more the VLSI and this includes our ACCI and the wireless sector. And overall, I think also in this second block of the company, we should be around break even I would say.

Okay that helps. Thanks very much.

Of course more details we'll see later.

Thanks Andrew. Next question please Dino.

: Stephane Houri – Natixis: Yes, good afternoon. Just a question regarding the visibility going forward because you are guiding towards more than seasonal sales increase in Q4. So, I know that it's still farther away, but with the visibility that you have now regarding the Q1 seasonality, would you say that it's going to be a normal drop in Q1 or not? And what would you, by the way consider as normal Q1 decline? Thank you.

Well, of course, I have to say that here we need to be cautious. I think, we need another month. I mean, today what we see and we look at this very important indicators, every Monday morning is our rolling backlog. I think that today what we see despite a really short Q1 because in fact Q1 is almost 12 weeks, I mean it's 12 weeks plus Saturday and Friday and that is it, is a very short quarter. I think looking at the number today and again we need another demand to understand better here, month or so to understand better. I believe that despite relatively short Q1. At this point, we are more or less around normal seasonal drop and I think you can go back and look at the history, but if I'm not mistaking here our normal seasonal drop is in the range of 7% to 8% something like this. Stephane Houri – Natixis: Okay. And regarding the utilization rate in Q3 did you give it or did I miss it?

: Stephane Houri – Natixis: Okay. Thank you very much.

Yeah.

Thanks Stephane. Next question please.

The next question is from Mr. Jonathan Crossfield of Merrill Lynch. Please go ahead, sir. Jonathan Crossfield – Merrill Lynch: Thank you. Hi, couple of questions, first one would just be on the long-term targets for OpEx as a percentage of revenues, I mean historically was 25% to 28%, I guess with [the last merger] that maybe gone up a bit, but could you just comment on where you think a reasonable long-term level would be?

Yeah of course, I think, it is obvious that wireless is more intensive. In fact, I think what would be important, what is important for me to track is really in a sense what are we spending or investing in R&D plus capital investments. And is a major turnaround in the company because the company was really having capital investment and much lower in R&D. And today, we are much less in capital investment and much higher in R&D and this would pay off. Okay. So, I think overall, I believe that we have potential expansion on the gross margin of course compared to the Q4, particularly moving from the $2.5 billion into the $2.75 billion per quarter, but I would say that in terms our overall OpEx is in the range of 30% to 32%. Jonathan Crossfield – Merrill Lynch: Great. And then just follow-up would be on Texas Instruments have recently purchased some equipments and start producing analog products on 300 millimeter wafers and claim that [inaudible] at 30% cost reduction, how would ST intend to compete with that, I mean do you think there will be salary capacity available that you can use or do you think it is a bad move.

.: Jonathan Crossfield – Merrill Lynch: Great, thanks very much.

Thanks Jonathan. Next question Dino.

The next question is from Mr. Martino De Ambroggi of Equita SIM. Please go ahead sir. Martino De Ambroggi – Equita SIM: Thank you for taking my question and good morning, good afternoon everybody. My first question is still on the U.S. dollar, should we expect any further restructuring if the U.S. dollar remains around current level, or you believe the current cost structure is already optimal?

Well, let's be clear here. I think, first of all, I am – there is some noise now coming from. Okay, thank you. So, I think that, the starting point is our model that we are [inaudible] New York and I think the important message, the first important message that we are giving today is that at 150, we will meet the models. Okay, this is the first point. The second point is that, at the end, we have three major groups. All the groups need to be profitable. Of course IMS will post some material and profitability already in Q4. The other block of the company is more in the VLSI and is ACCI and wireless. And I think that, this would be, break even or close to break even, or fully break even if we include the minority interest related to the JV of the wireless activity. And I believe that if we have to do more in ST-Ericsson, to get into the break-even at $750 million to $800 million we will do more, they will do more because any of our major sectors have to perform at the end and provide the proper free cash flow. Martino De Ambroggi – Equita SIM: Okay, thank you. And the second question is, similar to the previous one on the OpEx in the long term, the same question on the gross margin in the long run, considering the jump you made over the past two quarters. Thank you.

I think, you know what is our goal in terms of free cash flow. I think the given model is a transactional model, we want to be double digit of course and then you do the math. And I think the transitional model is, well we want to be at least 6% in Q4. This is clear and of course we want to improve from there, but we want to be double digits. I mean, hopefully, we also need to grow our revenues. I mean we were at $2.7 billion. We are only at almost $2.5 in Q3, in Q4. So, we need to grow our revenues and by growing our revenues, I believe, we will be able to provide the double-digit return in terms of free cash flow. Martino De Ambroggi – Equita SIM: Okay, thank you [inaudible].

Thanks, Martino. Next question, Dino.

The next question is from Mr. Glen Young of Citi. Please go ahead, sir. Glen Young – Citi: Thank you. I think in the quarter we saw sales to your distributor’s increased quite aggressively, and I wonder if you could spend some time talking to us about your level of comfort with where distributor inventories are today and or maybe your level of discomfort depending on how you feel?

Yeah. Well, I have to say that the inventory level distributors are extremely low, and we are not able to -- in this very moment, it's not too easy to -- the remainder is pretty strong because the POS is strong. So, what is happening particularly in Asia is that and now our two first distributors in the world are Asian. And particularly in Asia, I think there is a good trend of POS or point of sales. So, and I think that this moment is really not with the trend that we see in the POS in this very moment is really not refilling that inventory to support the POS to support that the business that they have. This is what we see in this very moment. Of course we are cautious and as I have already said, we do not count on all the backlog that we are in Q4. To project our Q4 numbers and those to project the next quarters, but in this very moment, the inventory position of our distributors are on the low end and the POS has grown significantly. We track the point of sales of course and so we are relatively confident here that there is no speculation at this moment. Glen Young – Citi: :

Carlo, will you take this?

Yeah. So on this line, we have the equity pickup for pneumonics. We have also the equity pickup for the design, joint venture in the ST-Ericsson sales, which we do as well consolidate under the equity matter. On the pneumonics contribution, frankly, we do expect that first of all you know that we do report, with the one-quarter lacking. So we have at this stage a quite good visibility of what impacting Q4 could be, this is based on the result on Q3. So on this respect, we do expect some substantially improvement by substantially reducing the negative equity pickup for pneumonics and of course you know that these reflect net earnings. So there are interests below the operating income, so we see very substantial improvement in pneumonics operating income already achieved in Q3 and there is some substantial reduction of the equity loss for ST when reporting it in Q4. Glen Young – Citi: Great. Thank you.

Thank you, Glen.

Thanks, Glen. Next question Dino.

The next question is from Mr. Odon de Laporte of Cheuvreux. Please go ahead, sir. Odon de Laporte – Cheuvreux: Yes, good afternoon or good morning. Thank you for taking my question. Could you clarify is there a lagging impact from unused capacity in Q3. So I mean in Q4, do you expect the negative impact from unused capacity charges in Q3 and could you quantify that please? Thank you.

Yeah. The impact of unused capacity in the second quarter has been in a range of four points of negative impact to the gross margin. And this is of course, sorry two points of negative impact to gross margin. For Q4, we do expect a very substantial recovery of loading and not yet an optimal situation with some, but marginal impact of unused capacity could be a few times of basis points of gross margin. On top of that, when looking at the gross margin dynamic into the fourth quarter, we should consider that these situation of under loading, reloading of fab is of course not optimal for manufacturing efficiencies at the fabs. And dollar fabs are currently suffering about these situation. They have experience some in efficiencies in the third quarter that will be reflected in the gross margin of Q4, as an impact on when selling the product and our guidance for the Q4 gross margin will include also this experience in efficiencies still related to this instability in the volume it depends. A good news is, stability six months ago was for going down, now stability is for going up and the fab are approaching a fuller stability for entering on day for four months at full speed in the next quarters. Odon de Laporte – Cheuvreux: Okay. And can you quantify the impact of inefficiencies in Q4?

You know it's always difficult since the end when you see at further result. Frankly should we listen to my colleagues in manufacturing of course we've – it’s a very huge number. So, let’s have the fab re-stabilizing and see the evolution of the gross margin. We are very positive on the side that once this problem could be solved, our gross margin will move towards another step of increment. Odon de Laporte – Cheuvreux: Okay, thank you. And just very quick follow-up of – other income and expenses line, what do you expect in Q4?

This other income and expenses line, as you know, we have values recovering to the current ingredient in Q3. Also we have experience in this line to one-time event. One is positive has been, proceed from a patented litigation that resolved in the favor of ST with a cash payment to ST and the other one is a negative event related to prior year grants. The overall impact of the two of them is a slight positive is $7 million positive impact. So if you look at the second quarter and you project, in Q4, you may expect a net income in this line slightly below the one of the third quarter given the effect of this one-time items occurred in Q3 that of course we do not expect again for the third quarter. So look at the Q3 and expect something slightly below, but there will be still an income balance. Odon de Laporte – Cheuvreux: Okay, it will be above 15?

Yes. Odon de Laporte – Cheuvreux: Okay.

Yes, definitively. Odon de Laporte – Cheuvreux: Thank you.

Thanks, Odon. Next question please.

The next question is from Mr. Tristan Gerra of Robert Baird. Please go ahead sir. Tristan Gerra – Robert Baird: Hi, good afternoon. When do you think industry normalization in the supply chain takes place and what are you doing currently to address some of the supply bottlenecks that your analog business is stating?

Well, of course, today there are bottlenecks and I believe that, as I said, we do not count on all – the demand, the backlog because it’s really important. So, what we are doing here is two things, I mean with the company investment program that we have and that we have described, we are working to improve our mix and we are working to remove bottlenecks. It's very much related to the mix of the technologies. So it's not capacity. We are not investing to say on capacity expansion. I think is to prove the mix for instance we need some more in terms of copper equipment in certain facilities, but in any case the focus is to work on this program to improve the mix internally. You know that we have already described and announced the capacity increase in call two. This will be done in the period from 2010 and 2012 over three years and will be overall – over three years about $0.5 billion. But for the rest frankly is also – I mentioned already you know the expansion in Singapore. The expansion in Singapore and the migration from five to six inch in Singapore is going to be supported by lot of tools that we already have as a consequence of the several six inch activities that we closed in Europe and in U.S. But for the rest, the real increasing was outsourcing, so we will buy more from outside and so this is a strategy. So, overall, I think in the short-term is using our capital investment in these days mostly to improve the mix in our fabs and to respond to the demand. Tristan Gerra – Robert Baird: Okay and just a quick follow-up. Is it fair to assume that your production ramp sequentially in Q4 could be a little bit ahead of your revenue guidance mid-point as you are trying to reduce lead times?

Of course, I mean here there are two considerations. One consideration of course is our ability to respond, but the other consideration is sustainable, and I was bock already to say that we do not believe that all what we have is sustainable because all what we have is too much. So, -- in terms of backlog. So, we will be back to $2.7 billion, $2.8 billion for sure. I mean, we were at $2.7 billion in Q3 last year. We need to be back often in the second half of next year, but I think, we do not count on all the backlog that we have. But indeed as you're seeing, we’re under pressure and of course we need also to serve at our best in doing everything it takes to improve the service to our customers. Tristan Gerra – Robert Baird: Thank you.

Thanks, Tristan. Next question?

The next question is from Mr. [inaudible] of UniCredit. Please go ahead, sir.

Hi. First, the computer ends market, with a just 5% decline compared to last year, could you have a little bit more to understand here what products this trend were driving?

Well, I think it is the notebooks, the notebooks and all of this changed here. Of course we are not in memories, as you know we’re not in the motherboard PC products, but we have a lot of other products that are important products. In fact I have to say that we have a task force in the company on PC motherboard and this is the combination of security products, is the combination of power supply products, is the combination of a lot of different interface kind of products, and so this is one block that is related to the PC motherboard and the other effect on ST is on peripherals and I have to say that Q2 was a – excuse me, Q3 was already a relatively good quarter for our computer peripheral activity that as you know is a combination of printers and disk drives. Our focus is the expansion of the customer base. I think, we have the products there. We have the POWER MOS. We have the analog controller, we have the security products, we have a lot of different interface, of course we have the disk drive products. We have a lot of the products for the printers and we want to expand the customer base from our traditional base of American customers to a more global presence in Asia and in Japan.

And a follow-up on pneumonics, you said of course you have visibility for the third quarter and now for your fourth quarter here, but just talking about the current environment for pneumonics in the December quarter, if this trend holding up, I mean, I think we even saw some shortages here in the [NAND flash] area, what's your view here going forward?

Well, going forward, I mean I can't comment on Q4, I mean of course going forward is more difficult. But as far as, of course we know Q3, I mean Q3 is not in our number because if we report, one quarter and delayed the pneumonics numbers, I can say that first of all the cash position at the end of Q3, at the end of September is $530 million. This is a material improvement and we’re pleased about the improvement in the cash position here. We see a solid Q4 - we see a solid Q4, is difficult, they have some difficulties to respond to all their customers.

Okay. Thank you very much, [Sam].

Yeah. Next question please.

Your next question is from Mr. Kai Korschelt of Deutsche Bank. Please go ahead, sir. Kai Korschelt – Deutsche Bank: Yes, good afternoon. I have a question on inventory and I believe you set for distributors you are currently shipping roughly in line with the end demand. Could you give a little more color around the sort of direct OEM business? Do you think there is still inventory reduction going on or has that subsided now? Thank you

Inventory into China which we…

Well [inaudible] maybe you comment I mean what is your vision, I have to say that in the computer peripherals for us of these products for the PC motherboard the demand is pretty strong and we have a lot of pressure. So, the…

Carlo that is true as well in digital consumer in particular the demand is very strong, there is no inventory correction any more ongoing and we’re shipping as much as we can inline with the customer demand, which is extremely strong at the moment. But there is definitely no signs of rebuilding inventory in any part of the channel, whether our top customers, that effect most venders or in the operators hands there is no – there is very much – very low level of inventory at this point.

Yeah. Of course, it is absolutely crucial to understand better Thanksgiving and this is a very important moment and later on Christmas. But again we do not have, at this very moment I don’t believe our customers are building up for. I think that they are -- at least to, they believe they have a genuine demand to serve and – but I want to repeat again we’re not counting the amount of backlog that we have in our hand for this moment. Kai Korschelt – Deutsche Bank: That’s great. Thank you.

Thank you.

Next question please.

Your next question is from Mr. Mark Lipacis of Morgan Stanley. Please go ahead, sir. Mark Lipacis – Morgan Stanley: Thank you for taking my question. Just to drill down on the comments on discounting customer orders a little bit on. How broad do you think the double ordering is beyond notebooks or types of products and can you talk about lead times? Can you give us some more color about how broadly you think your lead times have stretched out and how long to get back to normal levels? Thank you?

Well Carmelo will take, in fact some of his products have direction in lead times.

: Mark Lipacis – Morgan Stanley: And a follow-up question. A lot of times when you see this kind of demand you're able to get some increase in your prices. Can you tell us to what extend you can able see price improvement back in the margins? Thank you.

Price increase is a big work. But price decline is something we’re controlling much better now than two months ago where it's more to price decline, in some case we are revising price upwards also.

Yeah, there are some opportunities here.

Yes. Short time orders for instance. We take them at a higher price. Mark Lipacis – Morgan Stanley: Thank you, very much.

Thanks Mark. And we will move to our final question please.

The final question of today is Mr. [Sivaram Ramvel] [inaudible]. Please go ahead sir.

:

Well, of course this is an area where we are still working. I have to say that of course it has been a priority in all of this last month – last month because we really had to focus on inventory and cash and we built a model with much lower revenues. So, indeed I think it remains an opportunity, I think now coming out from the emergency I would probably spend more time here, but I would say that the focus during the last, really two quarters was on protecting our cash and making sure that we end this year that has been an horrible here with a net financial position that is maybe $900 million better than what it was one year ago, and with an overall free cash flow that is positive in – from the operation point of view that is positive in the year. So, indeed it is an opportunity, we are working on that it was not a focus during the last two quarters and we see in the future.

Okay. And should we be updated in coming Q2 or I think it would take a…

But I'm sure you are going to ask the question at each earnings call, so yes we will update.

Okay. Thank you.

Also, when we meet separately.

Okay thanks.

Thanks.

Thanks Sivaram. Carlo, do you have any closing remarks?

No, I think, again I think, we believe that we have progresses on the front of the free cash flow and important progresses in terms of inventory reduction. I believe that the dollar is not helping, but again I want to reconfirm the fact that we will meet that the financial modeling in Q4, despite unfavorable dollar and starting from there, I think we have expansion opportunity, both in terms of going back to $2.7 billion or $2.8 billion per quarter, but also in terms of reducing our expenses, particularly thanks to ST-Ericsson and improving our gross margin. So, we are motivated to start from Q4 of course and hopefully with a normal seasonal Q1 that will give us a lot of a hope for the rest of 2010.

Okay thank you Carlo. Dino that concludes the call.

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