The world's second largest wireless semiconductor company, the
three month-old ST-Ericsson,
held its first results meeting today, announcing a loss, a
re-structuring programme and confidence in its financial
strength.
The 50/50 joint venture between Ericsson and STMicroelectronics
started operations on February 2nd 2009 and reported sales of $391m
for an operating loss of $98m.
"Even in such a challenging climate, during the first quarter of
2009 we confirmed our number two position in the market," said
ST-Ericsson's CEO, Alain
Dutheil (pictured), adding, "we are
currently executing on an alignment of our operations that will
allow us to shape the long term success of the company, while
creating a sustainable cost structure for the short and medium
term."
This involves the loss of 1,200 jobs which is expected to save
an annual $230m in costs. It is to be completed by the middle of
next year, comes on top of a re-structuring announced by ST in
November 2008, which aimed to save $250m in annual costs.
"It's not just cost-cutting, it's the start of a long-term
strategy", said Dutheil.
ST-Ericsson will burn cash through the rest of the year, but
does not envisage having to ask its parents for further capital.
The cash burn of $42m in Q1 will increase in the subsequent four
quarters, not least because of the $70-90m cost of the
re-structuring programme, but the company believes it has enough
cash in hand, currently $358m, to fund the next four quarters of
operation.
The company will enter the netbook chip market by the end of the
year with a product based on its M700 platform; it has a
single-chip platform for next-generation Symbian smartphones called
U8500; a project with ARM to create a symmetric multi-processing
Symbian-based platform technology; single-chip solutions for
entry-level handsets, and ST-Ericsson's 4910 and 4908 EDGE
single-chip platforms which combine digital and analogue basebands,
RF transceiver and power management unit (PMU).
Dutheil added that that the company would have a 'strong focus'
on next generation technology including TD-SCDMA and LTE.
See also: Mannerisms, the blog of David
Manners. Updated twice daily, it's the distinctive, entertaining,
authoritative and never dull commentary on the semiconductor
industry, from someone who knows.
Sign up for the Mannerisms
eNewsletter.