Breakup on cards between STMicroelectronics N.V (NYSE:STM) and Ericsson AB
Northern, WI 03/13/2013 (avauncer) - Partners, STMicroelectronics N.V (NYSE:STM) and Ericsson AB have been looking to break up the ST-Ericsson venture. Their three-month long search for a buyer of their wireless chip business has yielded no results said some people who are familiar with the situation. As a result, one of the options that the partners are considering is to pull out of their four-year-old business partnership. Samsung Electronics Co., Ltd (KRX:005930) who was considered to be one of the potential buyers have not agreed to make any offer. The two companies who have a 50:50 partnership deal are aiming at completing the exit in the third quarter. ST-Ericsson has been struggling to introduce high-powered platforms and chipsets.
It had been facing heavy business losses due to the fact that its largest customer Nokia Oyj (HEL:NOK1V)’s business had been on the downslide. Didier Lamouche, ST-Ericsson’s third CEO in three years, will be moving on and no subsequent successor has been announced. The net losses of the venture since 2009 have amounted to $2.7 billion. Three people in the know said that in case the wind-down takes place, the Lund, Sweden research site might be reclaimed by Ericsson while STMicroelectronics N.V (NYSE:STM) might ending up integrating the Granoble, France site.
Job-cuts a definite possibility
Both owners are very eager to find a solution quickly. Samsung Electronics Co., Ltd (KRX:005930) has declined to comment on the matter. Shutting down the venture is the last resort as it will result in job cuts. Lamouche had overseen ST-Ericsson since 2011 and the company had since, announced cutting down on 1,700 jobs as well plans of transferring some of its product development to STMicroelectronics N.V (NYSE:STM). Last year the joint venture had reported net losses of $749 million. It had already injected close to $1.8 billion worth of cash into certain wireless technologies.
Shares of STMicroelectronics N.V (NYSE:STM) went down by 4.02% to close at $7.65
Shares of Samsung Electronics Co., Ltd (KRX:005930) went up by 1.20% to close at $1,512,000.00
Shares of Nokia Oyj (HEL:NOK1V) went down by 0.73% to close at $2.73