Carlo Bozotti – President and Chief Executive Officer Mario Arlati – Chief Financial Officer Carmelo Papa – Executive Vice President of the Industrial and Multi-Segment Sector Jean-Marc Chery – Executive Vice President, Manufacturing & Technology R&D and General Manager of the Digital Sector Lorenzo Grandi – Corporate Vice President, External Reporting

Simon Schafer – Goldman Sachs Amit Harchandani – Citigroup Stephane Houri – Natixis Francois Meunier – Morgan Stanley Jerome Ramel – Exane BNP Paribas Janardan Menon – Liberum Capital Andrew Gardiner – Barclays Capital Didier Scemama – Bank of America/Merrill Lynch Sandeep Deshpande – JPMorgan Gareth Jenkins – UBS Kai Korschelt – Deutsche Bank Peter Knox – Societe Generale Lee Simpson – Jefferies & Company, Inc.

Ladies and gentlemen, good morning or good afternoon. Welcome to the STM Third Quarter 2012 Earnings Results Conference Call and live webcast. I am Julia, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. After the presentation, there will be a Q&A session. (Operator Instructions) The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Tait Sorensen, Director, Investor Relations. Please go ahead, sir.

Thank you, and thank you to all for joining our third quarter 2012 conference call. Hosting the call today is Carlo Bozotti, ST's President and Chief Executive Officer. Joining Carlo on the call today are George Penalver, Executive Vice President, Chief Strategic Officer; Mario Arlati, Chief Financial Officer; Carmelo Papa, Executive Vice President of the Industrial and Multi-Segment Sector; Jean-Marc Chery, Executive Vice President, Manufacturing & Technology R&D and General Manager of the Digital Sector; and Lorenzo Grandi, Corporate Vice President, External Reporting. 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. This 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?

Thank you, Tait, and thank you for joining us for our third quarter conference call. Today, in addition to reviewing our third quarter, there are several important topics that I would like to address. Before going into detail in each of these areas, let me share some key points. First, looking at our financial results both revenue and gross margin were within our guidance range. The demand environment remains weak at the macro level and this is since June. But importantly, in spite of this, three of ST’s five product segments showed sequential revenue growth again this quarter; our Analog, MEMS & Microcontrollers, Power Discrete and Wireless, highlighting the traction of our new product portfolio. Second, there is a major positive dynamic underway at ST as our innovative product portfolio is driving an expansion of our strategic relationships with market leaders. For example, in automotive we just announced a strategic partnership with Audi to co-develop semiconductor solutions in three key areas of automotive design; reduction of CO2 emissions, safety and security, and infotainment and comfort. Third, we are taking steps to improve our net financial position in the fourth quarter with a strong focus on containing capital spending and a major inventory reduction plan. Fourth, in our earnings release last evening, we announced a new $150 million annualized saving planning in ST’s Digital sector to be completed by the end of 2013. And fifth, the third quarter restructuring and impairment charges significantly increased to $715 million. As part of our annual impairment test and based upon our assessment of the Wireless segment plan updated in Q3 2012, and the evolving dynamics of the smartphone industry, we posted a non-cash charge of $690 million. This charge reflects our current best estimate of the fair market value of our Wireless business. Turning now to the third quarter in detail, the market environment was weak throughout the quarter tracking generally to what we had been seeing since June, when the recovery started to deflate, uncertainty in customers demand increased and visibility decreased. Our third quarter revenue and gross margin results were within the outlook we shared with you in July. Our wholly-owned businesses were relatively flat to the second quarter. Nevertheless, new product momentum was clearly evident as anticipated with MEMS, microcontrollers, Power MOSFET and IGBT demonstrating sequential progression. Wireless revenue grew 4% including revenues from IP licensing of $35 million. In a weak semiconductor environment globally, we were able to show progressing key areas, with margin improvement, significantly lower operating expenses, lower losses and progression towards returning to a cash flow positive situation in the fourth quarter. Overall, I think this is a positive statement about our new product trajectories and traction. So as I said earlier, three of our five product groups reported sequential revenue growth. First, Analog, MEMS and Microcontrollers, revenue increased about 4% sequentially. Our MEMS and sensors business continued its outstanding traction. ST won the accelerometer and gyroscope socket for a new smartphone from a leading consumer electronics manufacturer and was awarded the dual-core gyroscope by a major mobile vendor. Our microphones earned a socket in a popular tablet from a major US corporation and our pressure sensors started shipping in a high profile smartphone. Second, Power Discrete saw revenue growth of over 5%, here due to higher demand for Power MOSFET and IGBT. And third, wireless revenue increased about 4% from the ramp of NovaThor platforms and IP licensing. ST-Ericsson continues to expand its relationship with Samsung and just recently announced that Samsung is using the NovaThor platform for its new Galaxy S III mini smartphone. Digital revenue was lower mainly due to a fast decrease in revenues from certain imaging customers, but it still managed to reduce losses despite revenues being down 8% sequentially. Automotive revenue reflected market weakness. However, we are very well positioned in the automotive market with more opportunities over the mid-term with customers including Audi, a new strategic partner. So let’s look at how we are doing in some product areas. In healthcare and wellness, among our life improving successes, we won a slot with a leading Asian healthcare equipment manufacturer for a respiratory aid system. In addition, we helped one of our partners earn the U.S. FDA approval for a patient Remote Monitoring System containing our MEMS, STM32 Microcontrollers, analog components and sophisticated algorithms. This will be used to detect and monitor cardiac arrhythmias. We also announced our efforts to accelerate health and fitness monitoring by supplying the low-power STM32 microcontroller and our MEMS technology to a fitness monitor offered by one of the leading consumer brands. In power management and energy saving, our MOSFETs were qualified by a major Japanese car maker for a DC/DC converter in their hybrid electric vehicles and one of the world’s largest automotive players awarded as a design win in the power supply for an Engine Management System. We also introduced the world's first and only automotive specific surge-protection devices. In the home, we won a socket for intelligent power modules at a leading European household appliance provider for high-end appliances, and we announced our first 900 volt, 950 volt SuperMESH5 Power MOSFETs, which deliver the industry's best efficiency and highest voltage rating for enhanced application reliability. In smart consumer devices, we earn an important design win, in fact is the first time ever for us, but our FingerTip multi-touch sensing technology with a leading mobile handset brand. We also announced a tiny chip that offers consumers the prospect of smaller, cheaper, portable set-top box capable of delivering broadcast and over-the-top multimedia services on the go. Moving on our gross margin, our third quarter results were on track at 34.8%, thanks to improved manufacturing efficiency and help by currency with unsaturation charges similar to those of the second quarter. Slightly better than anticipated, our operating expenses decreased 6% sequentially in part seasonal and currency, but also reflecting the cost realignment actions underway at ST-Ericsson. Looking forward, we expect to see a modest increase in operating expenses sequentially and we remain focused on on-going improvements in reducing spending levels. At the beginning of my remarks, I indicted that one of the key priorities for the year is to improve our net financial position. Turning first to our capital spending, here we had tightened the range for the year to $500 million to $600 million last quarter. Year-to-date, we have invested $398 million and I can now confirm that for the full year we expect to spend about $500 million. While early, we will anticipate a modest level of capital expenditures in 2015 as we believe our current manufacturing capacity is more than adequate. It will be challenging but I want to reiterate our goal to be positive free cash flow on a consolidated basis for the entire 2012. In order to maintain and improve our net financial position of course adjusted to account for our 50% investment in ST-Ericsson, this of course compared to the end of 2011. And let me now turn to the saving plan. This is designed to achieve $150 million in annual savings at the ST level upon completion by the end of 2013. A portion of the savings coming from the initiatives that we leveraged the synergies from our Unified Processing Platform approach by integrating the development of the System-On-Chip for digital TV. The plan also involves other new initiatives, such as efficiencies in our process-technology development model and expenses related to design outsourcing. In combination with the savings to be realized through the restructuring plan announced in April 2012 underway at ST-Ericsson, we expect a total of $220 million in annualized savings benefiting operating income attributable to ST by the end of 2013. These savings are based on Q4 2011 cost base. Let us now turn to the fourth quarter. Looking first at the market conditions, as you have read from a number of semiconductor companies, the environment continues to be weak. For ST, this has translated into decline in our bookings levels. Consequently, we expect revenues in the fourth quarter to be relatively flat on a sequential basis within the range of minus 5% to positive 2%. We do however anticipate strong revenue growth in our motion MEMS and environmental sensors and continued progress in microcontrollers. Now, in order to manage through this period and maintain our key priorities, we have put in place aggressive actions to align our manufacturing. Our plans include temporary closing fabs by offering extended holidays, repatriating activities from subcontractors, and taking other cost-reduction initiatives. With respect to our gross margin, given this very high level of unsaturation of our manufacturing, we are projecting 32% plus or minus two points. The gross margin is absorbing about 3.8 points of unsaturation impact. These actions in turn should allow us to bring down our inventory level by about $150 million based upon our fourth quarter revenue expansion and manufacturing initiatives and bring us back to our target turns level of around 4.5 times. We are also taking further action with respect to ensuring turnaround of our cash flow for the year as we just said, by reducing further our capital expenditure plans overall. And while we have had quarter-to-quarter variations, we expect to see an improvement in the fourth quarter in our net financial position attributable to ST and to end the year at a level similar to the end of 2011. To conclude, let me share a few points. In the fourth quarter of 2011, we started a strategic review based on the changes in our industry and at our former largest customer. Since then we have already taken four important steps. First with ST-Ericsson’s strategic plan in April benefiting ST as consolidated by the group. Second, again in April with the application process or agreement with ST-Ericsson that forms the basis of our Unified Processing Platform approach. Third, with the closing of this agreement in July and fourth with our new $150 million savings plan. We have now entered our last quarter of the year. This quarter will be important to us as we will conclude our strategic review, which we will announce in December. Our main principles remain unchanged. We want to continue to accelerate our roadmap towards our already announced financial model taking into account the change of market environment and some specific customer dynamics, and we will continue to ensure the future success of our Company in total. With, the two pillars, Analog and Digital both being sustainable segments of ST from a financial point of view. And with that, my colleagues and I are now ready to take your questions. Thank you.

(Operator Instructions) The first question comes from Simon Schafer from Goldman Sachs. Please go ahead. Simon Schafer – Goldman Sachs: Yes. Thanks very much. My first question to may be a little bit more incremental and follow about the pending restructuring, sorry strategic plan there.

Simon, can you – getting some echo here, the terrible echo, we cannot understand. Simon Schafer – Goldman Sachs: Hang on, hello – hello, sorry, excuse me.

Okay. Simon Schafer - Goldman Sachs: My first question was really surrounding the federal strategic review. Mr. Vicky, I guess (inaudible).

Wait, Simon. Operator, we may need to take a question, put Simon back in the queue, we’ll try another one. Julia?

Yes. The next question from Amit Harchandani from Citigroup. Please go ahead sir. Amit Harchandani – Citigroup: Hi, Amit Harchandani from Citigroup and thanks for taking my question. A quick one and then a follow-up if I may.

Sure. Amit Harchandani – Citigroup: My first question is on the restructuring plan that you have just announced. Could you kindly help us understand how this would pan out over the next few quarters? Would it be more frontloaded in the first half of the next year or more towards the second half? How we should think about modeling the savings leading up to 2Q 2013? And then I have a follow-up as well.

Yeah. I think the first benefits will be already in Q4, a few million dollars and then there will be already significant increase of the benefits starting from Q1 next year and progressively move on. Now, we could provide a more detail but a few million dollars already in Q4 and then moving to some double digit saving from above $10 million from the first quarter of next year and then of course progressively going on. Amit Harchandani – Citigroup: Okay. And as a follow-up, my question is around your R&D business model. You received some funding from the state in your initiatives as you look to develop technology and could you let me know the level of funding that you expect to receive for the current year? And I understand one of your programs, I think the Nano2012 is expected to terminate this year and there is no assurance for next year. Could you please help me understand the impact of funding for this year and potentially next year? Thank you.

Yeah. We can provide the precise figure. So I think let's see Q4 for instance...

Yeah, so I can anticipate that in Q4 the level of funding, it will be in the range of $30 million, and so we're having a total year of R&D funding in the range of $90 million.

So this is the overall grant for the company worldwide. Of course, not only in one country, it’s the overall.

Yeah.

So it is about $90 million in 2012. And I will ask Jean-Marc to comment on the Nano2012 and the next step. Jean-Marc Chery: Yeah. So Nano2012 program is, let's say running well. What we can say at this moment for the next step is, we have started some technical discussion with the French authorities to elaborate about the scenario of (inaudible) we can receive about our R&D activities effect. So it has well started, so the process is going on and we have adequate level of confidence to make some products during the quarter and as fast as possible in this important process for the company. Amit Harchandani – Citigroup: And just if I could just clarify that, there were some conditions right associated with that program. So from your side all of them have been fulfilled and what's the level of Nano2012 funding within the $90 million the overall grand number?

Well, this is too much of details. I think we do not have even the precise number here, I think of course is the more significant part, is the most significant part, if not all the 90 million because we had other activities here and there. And I would say in terms of and again, Jean-Marc, if you want to comment, but in terms of deliverables, what we had to do we achieved which is of course at the end of the day the 20 nanometer FD-SOI and the progress on the 20 nanometer FD-SOI is the technology roadmap. Jean-Marc, if you have any comment here? Jean-Marc Chery: No, no. Not more than you commented, Carlo. So we have achieved overall our deliverable and in some part of (inaudible) we have achieved more for sure in some part of it will be clear but the overall picture is well balanced. Amit Harchandani – Citigroup: Thank you so much.

Next question, Julia.

The next question comes from Stephane Houri from Natixis. Please go ahead. Stephane Houri – Natixis: Yes, hello, good afternoon. A general question to if I made to start to help us understand what kind of changes could happen from your new strategic plan which will come in December, I know that you were talking about self sustainability for the Digital business or autonomy in the French press release, this is not independence and you have already said no to split, but is it possible to imagine an alternative solution like for instance let’s say the joint venture, where you would put the Digital business and where you would keep the majority stake which would keep your promise to not to split? Or in other words, is the current organization stethoscope a possible option?

Well, of course I cannot comment particularly on the first point. I think I want to reinforce again that ST will remain one single company, this is clear. However I think we are working on the new vision, we are working on a new strategy, we are working on a day risk financial model, and of course we are working very much on our key growth drivers on one side, but those on the base of expenses that we can absorb and given the environment and also the state to certain business specific customers for ST. So we are working on all of this, all the manufacturing implications of part of it, and all of this will be presented in the month of December. It is an important step for us, and as I read before, we started to work on this process at the end of last year, so average think is part of the same process is complex, because as you know, as many things from technology products, manufacturing division to strategy, et cetera and the final step will be our review and presentation in December. Stephane Houri – Natixis: Okay. Could you also comment please on the bookings in October, because they understand that September was quite weak months, did it improve in October or not?

It did not. So far, it is stable, but the stable and unfortunately on a low-level, I think it is clear that in fact, since June we had fantastic booking performance in April and May, but since June has turned, I believe has turned for us, but looking at the guidance of our competitors is the same follow us in the semiconductor field, and I need to say that in October, we have the same booking rate that we had in September, which is not good. It is clear that this for us is a strong motivation to take a kind of aggressive measure on inventory. For us $150 million inventory adjustment in a quarter is an important move. Of course, we want to be prudent, and I think it is a safer approach as some consequences on the gross margin, but is important that we prioritize on cash flow and very effective control of inventory. On the other hand, I believe that our target is to stay almost flat in Q4 over Q3, and this is thanks to certain leadership positions in certain products and I believe this is better than the average then what we have seen so far in terms of releases from our competitors. Stephane Houri – Natixis: Thank you very much.

Thank you, Stephane.

Thank you.

Next question please.

The next question comes from Simon Schafer from Goldman Sachs. Please go ahead sir. Simon Schafer – Goldman Sachs: Yeah, hi, thanks so much (inaudible).

Much better. Simon Schafer – Goldman Sachs: Thank you. Just wanted to ask actually about gross margin into the fourth quarter, just to get a better sense how much of that is, how much of the decline is driven by the inventory [bend] down. Buses under loading on the utilization charges or FX any sort color on the sort of 250 basis point contraction in gross margin, and only a small revenue to conduct that will be very helpful.

May be I can comment.

Yeah, Lorenzo please.

Yeah, the dynamic of the gross margin moving from Q3 to Q4 as you said we’re losing 280 basis point. Actually we’ve an impact of the unloading charges that sequentially will impact the gross margin by 280 basis points. You know that we are already unloading charges during Q3. In these respective, we have 280 basis point and then we have a positive impact of some efficiency manufacturing. Why we will have a negative impact between a price and mix in the range of 80 basis point. So at the end, 200 basis points are coming from the manufacturing and 80 basis points are coming from price and mix. On FX is very minor. We remodel our gross margin, one third actually Q3 has been 129, that the overall dollar exchange rate.

So, is the decline is all the additional of course acceleration, charges, and on top of this of course there are disruptions in our facilities. So even if it is not in the instauration (inaudible) cost due to the disruption because it’s pretty broad out of course is doesn’t have the overall efficiency performance in our fabs. Simon Schafer – Goldman Sachs: Got it, thank you.

Maintenance strategic for the cash Simon Schafer – Goldman Sachs: Understood, and my second question is – now that you sort of executing another yet an additional restructuring program and obviously lots going on at ST-Ericsson, what’s the rough expectation out for (inaudible) breakeven revenue on an operating basis? I’m just trying to understand given the restructuring into next year, is it north of $2 billion, is it $2.2 billion, $2.5 billion some sort of indication on your quarterly EBIT breakeven on the restructured format would be very helpful.

We are talking December. This is the part of what we would present in December. I think of course as I said before we want to significantly risk our the execution of our plan and we want to reconfirm of course the overall financial model but the objective is to the risk the way it go to the financial model and to make this roadmap faster. So this is really the bulk of what we are talking about and I think is of course part of what we are going to present in our strategic review in December. Simon Schafer – Goldman Sachs: Thank you very much.

Thank you, Simon.

Thank you. Next question please.

The next question comes from Francois Meunier from Morgan Stanley. Please go ahead. Francois Meunier – Morgan Stanley: Yes. Thanks for taking my question. My first question relates to CapEx. You spent quite a lot in Q3, $200 million, what did you spent it on, you are not building an user into (inaudible) fab I guess?

No, no, we are not. And I think who is going to comment?

Yeah. On the CapEx, there was the leaseback that was around $60 million of leaseback of capital leasing in our facilities around [Crolles 300]. This has of course accounted during the quarter in Q3 and the remaining portion of the CapEx is related to the ongoing activities on the change of MEMS and maintenance in the other steps.

Yeah, but also to be clear when we met in New York, we had other aspirations for Q3. Okay. Francois Meunier – Morgan Stanley: Yes, of course, yes. Okay.

And is clearly that, what you see is the payment of our capital investment, okay. And the payment is Q3 is reflecting what we have decided in April and May when it was very strong. I mean I remember that our backlog in Q3 was at the end of May on a rolling base was 12% up this is what they said in New York. And of course, we were prepared and then we drastically change and we have to react, we did react the plan in May was $750 million and then at the end of July, we had already given a window from $500 million to $600 million and now is clearly $500 million in terms of payment again. And what you see for this is the payment and not what we have received in terms of equipment. So there is this one off that is important the $60 million, and then there is also these adjustments that has started in June, July, but of course it will be much more visible in Q4 [as well]. Francois Meunier – Morgan Stanley: Okay. Just a quick one on the strategic review, of course, you can't say much, but the restructuring plan you are announcing today's incremental $250 million if you announce something in December for strategic review, this will come on top of the $150 million.

Yeah, of course. So this does not mean that we announced anything, but if we would announce this something is something new, this is clear. And again is in terms of vision, strategy et cetera, et cetera. The $150 million however is not on top of what we have and I think we wrote in the press release, but I think is better to clarify, because everything we have already provided, but maybe is better to reconcile. First of all, the $320 million that ST-Ericsson has presented in April is 50-50. So 50% is for us and 50% for Ericsson of course. Then there was the merge of the two application processor teams, and we had quantify not in terms of number of people, but in terms of dollars in various occasions I said is, this was in aggravation of about $90 million for ST. So the way to make the calculation is 320 divided by 2, that’s of course is 160 minus 90, which is 70, plus the 150 that we have just announced and this is the total of 220. Francois Meunier – Morgan Stanley: Okay. May be a final question about the announcements you made in Automotive, one way of how is the other one for hybrid car. It looks to me like its more like Infineon stuff usually this type of announcements. Are you kind of gaining market share in automotive or will you take market share on the back of those announcements?

I do not know whether its Infineon stuff or not, this is you said. I think for us is great stuff. It’s great stuff, because it is broad range in terms of technologies. I think it is broader than many of our competitors. We are talking about smart power, we are talking about discrete power, we are talking about microcontrollers, we are talking about car infotainment, we are talking about imaging for instance, so we are talking about a broad range of products, technologies and applications in the car. And of course, we are very proud to be a partner of a world leader particularly in the high-end cars, where electronics is clearly an element of to drive innovation and differentiation. So now, I think are we gaining share, we think so and of course it’s not that simple to measure the market share. If I look at the double USGS figures this year, and if I compare the double USGS figures this year with the result of the company that are real reporting on the stock market where the number is crystal clear on the strong. Sometimes we have some doubts of certain statistics, but yes, we believe we are gaining market share. I think for us it’s a very important part of ST and we are not exploited yet, the major effort that we have done during the last few years on the 32-bit microcontroller. For us, this is a new initiative. We said already that we have more than $1 billion, I think now it's probably close to $2 billion. Design wins on the new power microcontrollers. This is not yet really contributing, so this is hopefully will be on top, and we are now that the time – I mean fixed time in terms of deployment and growth, but is an impressive set of design wins in microcontrollers in any continent. So not only in Europe, but even in Japan, and also I think is important, and we are confident that we have the technology and products to lead in this market. Francois Meunier – Morgan Stanley: Okay. Thank you, Carlo.

Thank you, Francois. Next question please.

The next question comes from Jerome Ramel from Exane BNP Paribas. Please go ahead. Jerome Ramel – Exane BNP Paribas: Yes, good afternoon. First question would be, what is now the book value of ST-Ericsson, and concerning the net debt, do you think you will have to recapitalize on that? And second question will be on the Digital, without giving a hint on your strategic plan in December at least on the short term, how do you want to address the losses from this division? Do you think because of the new client coming in – sense of that will help to come back to the black or do you think you have new patentees because of merger of MediaTek and Mstar in Asia or how do you see it on the short term without disclosing your long term strategy?

Well, I’ll take the second one and then Mario will comment on the book value [Lorenzo]. I think we have four drivers, and I want to make sure that is clear that is not only expense reduction, because of course can work – cannot work long term. The first one is imaging. Imaging, it is very difficult for us to see here, because our two major customers, we have difficulties here is even evident from the decline of the revenues that we have highlighted in our press release moving from Q2 to Q3. However, we started two years ago a differentiation strategy, and we have won four new major customers in different application fields. And this will be an important growth driver for the Digital Sector and for the company starting from next year. I’m very encouraged by the quality of what we are doing and also the quality of this new customer is global, is in three continents, and is pretty big, so this is one driver. The second driver clearly is the gateway and the cable, and the cable market for the set-top box. This is an area where we are not present, and thanks to our [Lee] and Alicante offer. We are making progress and we believe that we will be an important player in the cable market in the gateway market in the United States. The third driver is what we said, there is discrete structure on TV, but I believe the restructuring is needed, because first of all we need to start the synergies and in the combination with the application processor on one side, but on the other side, we also want to work closer and better align with the major customers in TV, and as you know the major customers in TV are in Japan and in Korea. And we are doing this I believe an important opportunity for us, we have a good portfolio of IPs. I think with this move we work on exploiting the synergies, but it is there and we are working closer with our Asian customers not many and to make sure that we are a better align. And then the fourth initiative of course, is the initiative that we have presented, because $160 million, sorry $150 million savings, this maybe the internal target. The $150 million saving is important, because it is concentrated on the Digital Sector.

And now to the impairment of wireless, we consider a wireless internal business unit, and not only as ST, we have few in the ST books, the value before impairment was $1.3 billion declining by $690 million, which means a net fair value about $650 million. Jerome Ramel – Exane BNP Paribas: Thank you very much.

Thank you, Jerome. Next question please.

The next question comes from Janardan Menon from Liberum Capital. Please go ahead. Janardan Menon – Liberum Capital: Hi, thanks for taking the question. Just going back to your strategic plan both for the STM as well as ST-Ericsson, because you’ve said that you’ve pointed external advice of that as well, I just wondering, are the two linked in any shape of home how can the two businesses take courses of their own, especially given the fact that you have linked the two with on the apps processor side from the point of view of joint R&D program. And, just on that while you said that you wont compromise the unity of the company, is that comment specifically only for STM, and the wholly-owned business and – would you removal into take a step in that direction on the JV. A short follow-up is on the R&D cuts, which area would be the bigger contributor for the – sorry not in the R&D cuts, the inventory cuts, which area would be the bigger contributor for the inventory reduction in Q4?

The first question is two things, one is very specific, and of course I cannot comment is about ST-Ericsson. And the other one is more conceptual, and I can comment, and I think is clearly do for us. Clearly when we talk about an overall strategic review of the company, this strategic review is on the Digital sector on ST is on ST-Ericsson, which of course is what we do in VLSI. And these on the other block that is what we define as sensor power is all of this. Of course ST-Ericsson is flat for [the week]. Now I cannot comment on the specific angle that you made on ST-Ericsson of course. As far as the inventory reduction is concerned, I think it is broad. It is now…

Yeah, I mean involving all the business unit of that – most of the business unit of ST, we target that we reduce inventory in the range of $150 million in Q4, and we should achieve a target in the range of five terms at the end of the quarter. This is a work that we plan to do during this work.

Yeah. There are few areas where of course, we have I think the growth will be impressive in Q4 and, of course the priority shipping…

Definitely in motion MEMS, so we have microcontroller, and also in this area there will be some reduction in inventory.

So it is broad. Of course there are areas where the demand is really very strong for us like MEMS and microcontrollers. So may be here is a little bit more mitigated. That is a global program in dispatching most of our fabs and plans. Janardan Menon – Liberum Capital: Okay. Thank you very much.

Thank you. Janardan Menon – Liberum Capital: Yes.

Next question please.

The next question comes from Andrew Gardiner from Barclays. Please go ahead. Andrew Gardiner – Barclays Capital: Thanks very much. Good afternoon. My question was around application processors, and both – what you’re doing within Digital as well as within ST-Ericsson, and trying to get your view on how you see that fit within the industry. You are not the only major semi-vendor having difficulty in application processors at the moment. And I’m just wondering whether you think that your results and profitability and as your peers suggest that this industry is simply too over served, too competitive, and I’m wondering whether all your restructuring and trying to take cost out, which is one thing, but do you also think that may be some players need to exit this segment before it becomes more profitable for the remaining players?

Well, I believe that the market is very broad, it is very large. And of course, I believe that there are areas where we in ST have already an important leadership position. Overall, I think in the certain blocks, we are number two and this business is becoming a kind of application processor business. First of all, the processor of course are now based we are talking about complex platforms and this is a business that for us is pretty good. I mean I already described the priority. I mean, we have a very, very strong position in Europe, we have a very strong position in Asia, I think we are Number 1 in China, and we want to enter the cable market, which is of course normal and brought on the server on the gateway and on the client side. So this is an example where, yeah, there are competitors, but not too many, this is an area, let's make another example, ST-Ericsson recently they have announced a combination of modern and application processor for the Galaxy Mini right, so this is another good example. This is a leadership position something that we have learnt to do mastering the application processor. So this is another example. There are competitors, of course there are, may be more than in the set-top box. We can talk about automotive, in automotive, we have such a position that it will be a normal evolution for us to focus more in terms of application processor. So if through it’s a very competitive market, I think particularly in certain areas, but there are other areas, first of all in ST we already have a very strong leadership position and not always, it is so crowded. So of course, it is happening now, it is just now, because we have merged it in July, physically the things were merged in July and just today, yesterday we have announced now the integration between the TV and the set-top box that I believe as an important step. So we believe we have a lot of value. I would like to mention also our FD-SOI technology. This is a good technology line. We have now the FD-SOI running 28-nanometer in car and is providing a good advantage in terms of trade-off between processing power and the power dissipation, and I believe is one of the best in the market and this is the way that we see an important competitive advantage. Andrew Gardiner – Barclays Capital: Okay. Thanks very much. Also just a quick follow-up, on the distribution side, that was your strongest customer segment quarter-on-quarter. Just wondering what information your channel partners are feeding back to you in terms of demand in inventory levels in the channel? Thank you.

This is Carmelo Papa speaking. I’ll say that the stock level is normal, what we could call normal, but the order scan with very short frame. So there is this uncertainty on the market, which does not allow or prevent our distributor to plan for the medium and long term as they used to do in past few years with the same level of stock today. So it’s the uncertainty that rains everywhere.

Yeah. So this is what I was saying before. We do not believe it is a major inventory production what is happening today in this market. The inventory position at our distributors is pretty normal.

(Inaudible)

Yeah sometimes it’s a little better, sometimes it’s a little worse, but overall it’s okay. I mean our distributors out there also to hold some stock. The problem is more the visibility and the underlying demand and the approach is very prudent, because the visibility is not there and there is a lot cautiousness including our Asian distributors.

And it tends to work back-to-back and they have orders, they place orders.

So they tend to place orders with a very short (inaudible).

Thank you, Andrew. Next question please.

The next question comes from Didier Scemama from Merrill Lynch. Please go ahead. Didier Scemama – Bank of America/Merrill Lynch: Yeah. Good afternoon gentlemen, thanks for taking my question. Two quick one if I may. First on gross margins, I’m just trying to understand the sort of the dynamics grid into Q1. So first, you are taking down your inventories due in Q4, which would imply and as you said your bookings almost great, which would imply we probably have a seasonal Q1. So normally when revenues fall the underutilization charges basically increase, so your gross margin and principle should go down in Q1 versus the 32%. But at the same time you've got basically fewer working days in Q4 since you are closing the fabs at Christmas time. So does that mean that the normalization of working days in Q1 will sort of offset the increase in underutilization charges? That's my first question.

I think it is premature to say. It is very difficult, the visibility is not there. I think of course, the move that we're making in Q4 is pretty good, for us $150 million inventory adjustment in one shot, it is important. And our fabs will not even – even if we would like to go back to full loading in Q1, I think it will be impossible. So it cannot work like this, and also I think what we need is hopefully now at the end of October, and then in November to get a better visibility and really decide what is loading level for Q1. The temptation will be to say is going to recover, and Q2 is better and then to push a lot loading in Q1, but it's premature to say. Clearly when we say we have $80 million of unsaturation cost in a quarter, it is not all the story, because there will be also inefficiency in the fabs.

Some inefficiency and then it will impact likely also Q1.

Q1, because you do not work with $80 million of unsaturation log on one side and the other side pretend that the efficiency that the best because there is a link between the two. But overall, I think it’s premature. We really need to understand that is moving during the next few weeks, particularly in months of November and see the evolution of the bookings. This will be very-very crucial for us to understand how to position then Q1 in terms of loading. And hopefully significant reduction of the unsaturation cost, but we do not know for sure we need to wait and see. Didier Scemama – Bank of America/Merrill Lynch: Right. And then the second question is on the re-structuring of the new strategic plan in December. Again, I know you can’t say what you are going to do, but does the re-structuring, I mean is the appointment of an advisor for ST-Ericsson part of that plan or is ST-Ericsson and Digital separate stories? Thank you.

This is as I said, ST cannot be a separate story. I think conceptually when we talk about ST, we talk about ST and we talk about ST-Ericsson, because we all understand what are the implications here. And of course ST-Ericsson is a joint venture and I think is normal for shareholders. We have advisors to help the shareholders advising us. Having said that, the way that we see is, we want to go back faster to our model in-terms of financial model of course exploiting and focusing more on uncertain growth drivers that are there, that are very important for ST and some of those growth drivers are also very important leadership position worldwide. And on the other hand, we also must work on the expense base. ST must become a leaner company, I started to say that in New York, we must become a leaner company because we do not have any longer the same aspiration that we had, for instance in Q2 and Q3 last year, it is not exactly the same. And this is for ST-Ericsson and is for ST. So this is what we're working on. We started in Q4 last year, and there were a number of steps. Please trust me all of these steps are part of the same vision. They are not just occurring obviously by chance and the final step is what we're going to present in December. Didier Scemama – Bank of America/Merrill Lynch: Okay, cool. That's very helpful. Just a final question on the power business, congratulations you've done a great job, especially relative to your peers. I just like to clarify one thing when you talk about IGBTs, do you talk about IGBT transistors, i.e. Discretes, are you talking about IGBT modules because it's not the same market size and it's not the same margins. So I just wanted to make sure I understood it correctly?

Carmelo, speaking again. When we talk about IGBT, we mean both, discrete and modules. Of course, we are newcomers in module business, therefore our presence is much stronger in IGBT Discrete which is typical applications for module controlling in washing machine, consumer goods and everything. But we are entering big times in module business. The good point of about that is, being newcomers in module business, we have not suffered the biggest land of the module business encountered recently. But that's like, we are starting from small numbers so we can only grow but we mean both things.

And we have (inaudible) in China.

Yes.

On module, on power module.

So getting a lot of qualification these days on modules. Didier Scemama – Bank of America/Merrill Lynch: Well done.

Thank you.

Thank you.

Next question please.

The next question comes from Sandeep Deshpande from JPMorgan. Please go ahead sir. Sandeep Deshpande – JPMorgan: Hi. Couple of few questions, firstly on your automotive business, I mean what trends are you seeing? You’ve seen some weakness in the third quarter, can you comment on how you see that going for the fourth quarter and beyond? Secondly, on your expenses maybe you can make a comment on your operating expenses given this different moving parts as exchange rate that is the cuts associated with this new digital restructuring as well as, I mean the ongoing ST-Ericsson cuts, so how would we be modeling operating expenses into the fourth quarter? And then finally, I’d like to have quick, I mean this has been asked a lot, but are you now saying that you are willing to take the losses of ST-Ericsson that is the analog businesses of ST or the sense and power business for ST will take the losses of ST-Ericsson percentage little for and long period of time, because you're saying that this is going to remain company joined together?

No, I think, first of all they are different questions. And let’s try to – Sandeep, the first one was on...

Automotive.

An automotive. In Q3, we saw weaknesses and we see the same weakness in Q4. Now of course, hopefully is just even in Germany, where there was a good momentum even at the beginning of Q3, there is a change. So there are – now how it is going to be next year, frankly I do not know. We believe we have a lot of new products. I already mentioned the microcontroller that is a new important business, but as on the power microcontroller 32-bit on the market is difficult for us to say. I think Q3, it was pretty weak and we see the same level of weakness in Q4. This is what the auto market. We are confident on our technology and on our products, but we do not have a clear picture of course we have visibility for Q4, this is there and is still on the weak side. If we move to the second question was, Sandeep, sorry. Sandeep Deshpande – JPMorgan: Operating expenses.

On the operating expenses, we are – Q3 was pretty good, I mean during the conference call, I said that we would have declined 5%. We did decline 6.2% and we expect overall a moderate increase of expenses in Q4, let’s say 2.5% or so. But again is an order of magnitude and this is our visibility today. And the third point is exactly the opposite. What work we’re saying here is that we want to make sure that rapidly the two major pillars of the company becomes self sustainable from the financial point of view. So the VLSI part of the company that of course is the Digital Sector of ST-Ericsson, these must be sustainable because these are time where there are resources generated in a micro block and using the other block is over. We must make sure that this becomes sustainable very early. Sandeep Deshpande – JPMorgan: Thank you.

Thank you.

Thank you, Sandeep. Next question please.

Your next question comes from Gareth Jenkins from UBS. Please go ahead. Gareth Jenkins – UBS: Hello, just wondered if I could ask couple of quick ones. Firstly just a follow-on question from earlier. I wondered whether you could give the utilization rates that you are currently seeing in the business and what you expect for Q4? Secondly, I wonder if you could give us book-to-bill by area, so what you are seeing in each area? And then finally, just in terms of the size of the MEMS business as you go into the end of this year so obviously good momentum there, what do you think the MEMS business standalone will be this year and more beyond next year? Thank you.

Okay. So the duration I think get the number, so let's go quickly.

Utilization rate that we see for the fourth quarter is in the range of 65%. This is what is bringing the $80 million plus.

Yeah, and it was $80 million in Q3.

And it could be as well as 80%.

So there is a major drop.

Yeah.

Then the other question was MEMS right? Gareth Jenkins – UBS: Book-to-bill.

The book-to-bill in, well we do not provide detail of the book-to-bill by family, but overall for the company was below the clarity. I think it was very much around 0.5% or so. It was clearly below the clarity. And we do not provide detail by family, but as I said the weak market conditions is pretty broad both geographically and from an application and products point to view. Of course there are exceptions, I think our MEMS business, we are now – on the MEMS business, we are now running [what at fundamentally] another quarter without Microfluidics and without another special products, and we expect to make a big jump, a big step forward in Q4. Gareth Jenkins – UBS: Thank you.

Then on MEMS, Carlo.

This is on MEMS.

Make sure on the drivers of MEMS.

The drivers on MEMS, yeah, the drivers of MEMS, I think we have three drivers of MEMS, one driver is of course the miniaturization, that is happening more and more in many, many applications. The second driver is more and more functions, I mean we are in one unique position, very strong position, we can cover motion sensors, we can cover pressure sensors, we can cover environmental sensors, we can cover touch sensing is a broad range of sensors, and so this functionalities and also merging the functionalities in one package in one chip, et cetera. And then there is a third vector, and the third vector of course is new applications. And I would like to underline here that for us automotive is becoming an important area for sensors, is new for us by choice, because we wanted to start and focus on the consumer part of this business, this is a big market and I believe we have the technology, we have the quality and the manufacturing infrastructure to run MEMS also for automotive customers and we have the first success here, but there are other examples, like for instance, healthcare again is a new market, but very promising and then actually we convinced that these kind of products will be very pervasive in a healthcare kind of applications, so these are the three key drivers, and we need to focus more, we need to put more resources here, and to go faster, and really cover all possible sensors applications, and the combination of sensor applications, but now in the future.

Thank you, Gareth.

Next question please.

The next question comes from Kai Korschelt from Deutsche Bank. Please go ahead. Kai Korschelt – Deutsche Bank: Yes. Good afternoon, thanks for taking my question, I have a couple, the first one is really just to follow up on auto to clarify, I think you said, you’re seeing similar weakness in Q4, relative to Q3, I think third quarter you had 3% decline quarter-on-quarter, I mean now we talking about similar numbers or is it potentially worse than that. And my second question is on dividend looks like at least for the next two quarters, you probably continue generate negative or slightly negative for break even free cash flow and EPS. I’m just wondering, how big is your to desire to protect the dividends at the current level? Thank you.

Well, I think, let’s see again on the automotive, we decline in Q3 over Q2, and it is possible that there will be another small decline in the automotive, because it is also a possible that decline will be less, but this in the range of the visibility that we have today.

Yeah, it will be let’s say of course is difficult to say that about it will be let say, I think a smaller decline…

Smaller decline compared to Q3, but we already had a Q3 decline. So a smaller decline. And no, as far as the cash is concerned, we want to go back to the same financial position in – at the end of this year that we had at the end of last year. I think our net financial position of course, taking into consideration 50% of the debt to Ericsson that is normal, because the other 50% of course is the confidence of our partner here. Our net financial position and very simply the difference between the gross cash and the debt was $1.17 billion, $1.167 billion at the end of last year. And our ambition is to close this year flat, it was a difficult year of course. We have gone through major drop at our four more major customers very intense drop, we went through of course the macroeconomic uncertainties, but at the end of the day the plan is to close the year with the same net financial position, and this will require of course to generate a positive free cash flow in Q4. Now it is slightly down, but not much. And as far as the dividend are concerned, of course it's premature and it's clearly not only us, but the shareholders is assembly in May. We have a lot of time of course, our motivation is the motivation of the management is to generate enough cash to move on with the same pattern. But it is premature.

Thank you, Kai. Next question please.

The next question comes from (inaudible) Robert W. Baird. Please go ahead.

Hi, looking at the inventory reduction in Q4, is there a carrying effect negative on gross margin in Q1 or is the impact of the under loading in Q4 all realized in the Q4 gross margin. And if that’s the case, is it fair to assume that unless we have a $150 million decline at (inaudible) in Q1, which will be well below seasonal that otherwise gross margin will have to rebound in Q1?

Depends on loading in Q1, let's say this is already, I mean this is what I said before really depends on the loading in Q1. And today it's premature to see and particularly in the conversation like this to describe what will be the loading of Q1. This will depend a lot on the bookings that we have this month and next month and at the beginning of December. Priority is to be very clean. I mean the move that we're moving on in inventory will bring us back to a level of stock turn that is 4.4, 4.5 this is the level, and really there is no reason for us to roll back on the loading. If the booking is coming back we will be very motivated throughout our fabs and goal and if the visibility is improving you know the wafers of Q1 and mostly for Q2, but we need to see a change in the bookings trend. And is premature to say today what will be the level of loading in Q1.

Thank you. And then given your earlier comments about normal supply chain inventories, I'm assuming that your selling is going to be more or less in line with sell through in Q4?

Say again, sorry.

That your sell-in will be more or less in line with your sell through in Q4 given your commentary in the call that channel inventories are relatively normal (inaudible) distributors.

No, we think so. Of course, is very difficult to predict what will be the sell out from our distributors in Q4, but yes, indeed we want to as much as possible to keep this balance, of course it may vary region-by-region, distributor-by-distributor, but overall the objective is not to be in that inventory to our distributors.

Great, thank you.

Thank you, Christian.

Thank you.

Next question please.

The next question comes from Peter Knox with Societe Generale. Please go ahead. Peter Knox – Societe Generale: Thanks to taking the question. On the AMM business, you are obviously getting very good traction of the MEMS business and microcontroller particularly on sequential basis, can you explain some of the puts and takes of why we not really see that speed through in terms of operational leverage and margin expansion in the last few quarters?

,: : Peter Knox – Societe Generale: Okay, thanks

I think Q4 objective is to grow that the top line here and also to grow at the operating income from a percentage point of view. Peter Knox – Societe Generale: Okay, thanks so much.

Okay, I think we’ll have time for one last question please.

The last question for today comes from Lee Simpson from Jefferies. Please go ahead. Lee Simpson – Jefferies & Company, Inc.: Hi, thanks good afternoon, thanks for taking my question. Maybe just first half in the IP licensing that you recognized in ST-Ericsson $35 million, one of you give us a sense for what is the nature of this, I mean in particular, I’m trying to determine this is platform license that you’ve done, and you can indeed there some ongoing business here.

Lee, there is a conference call, with ST-Ericsson coming soon, I think is, I can tell you, clearly is not concerning the LTE, is not concerning advanced technologies some legacy modern generation, but if you want to get more details, what I can say that is not – the LTE modem is not the most modern techniques or inventions, but these all the technologies is legacy kind of technology in the modern connectivity, but of course there is a conference call coming soon for ST-Ericsson and you may have more details from them. Lee Simpson – Jefferies & Company, Inc.: Great. May be as a quick follow up if I could, as regards to fab closures, I just want to trying to understand, which fabs you're looking to close, what is a temporary closer really mean and when is this likely to begin, and may be as an addendum to that what – does impact will this have on the FD-SOI work that you're doing at 28-nanometer?

Okay. We have Jean-Marc on the line and I ask Jean-Marc to comment both the calendar of the fab closing and of course is today since the end of August will formalize and the impact on the FD-SOI. Jean-Marc Chery: For an advance tab like qwerty Android that basically we will limit the closure of the fab at the Christmas period, and for the rest we mange it through (inaudible) temporary unemployment. So to make the contest very simple in fact we are the part of shift in terms of (inaudible), but the fab is continuously open. So this is a smart way to maintain all the prototyping activity totally intact, and I can tell you that today the fab is outperforming second time for prototype. We have been able to achieve the order 3 mask – data mask level for the 40 nanometer and very recently for the SOI the order seven-day in 28 nanometer. So we will have no impact on the FD-SOI related to the closure because in fact it is temporary auditing and employment. Lee Simpson – Jefferies & Company, Inc.: Great. Thanks for very full answer. Thank you very much.

Thank you.

Carlo, any closing comments?

No, I think of course it’s challenging time we are going through, I mean I invite you to stay connect with us for our December strategic plan presentation priority for Q4, of course is the execution of what you said, I believe our guidance, I perceive our guidance for Q4 is better in terms of sales evolution compared to many of our competitors, and is important for us to focus on cash, and cash generation in Q4, and for inventory reduction, priorities to finish to see with exactly the same net financial position that we had one year ago, and of course the priority for Q4 is the preparation, I mean the completion of the preparation of our strategic plan that we will present in December. Thank you again for your interest in ST.

Thank you.

Ladies and gentlemen, the conference is now over. Thank you for choosing the Chorus Call facility and thank you for participating in the conference. You may now disconnect your lines. Goodbye.