Posted March 13, 2013 by David H in Technology

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.

Equal losses

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

David H

David H. Steinberg grew up in West Hartford, Connecticut, entered Yale at age 16, and earned his law degree from Duke University, where he served as editor-in-chief of the law review. After four years of entertainment law in Atlanta and New York, he abandoned his legal career to attend U.S.C.’s Peter Stark Producing Program. Steinberg broke out as a writer in 1999 with his teen comedy SLACKERS that ignited a bidding war for the script. The movie starred Devon Sawa, Jason Schwartzman, and model Jaime King and became an instant cult classic.