Then, last week, ST put out a denial of another Bloomberg story – that ST had decided not to break the company into two parts.
Also, last week, ST CEO Carlo Bozotti denied at a Morgan Stanley conference that he was intending to buy out jv partner Ericsson from the ST-Ericsson jv.
So we now know what’s not going to happen when ST announces its re-structuring plan in December.
It is said that the Italians want to keep the company intact while the French want to split.
Which is odd because the Italians make the money and the French spend it.
On the other hand, the French government is a more generous distributor of largesse than the Italian government – possibly because the Italian government doesn’t have much largesse.
ST-Ericsson has piled up $1.5 billion of debt since it started trading in 2009 for half of which ST is responsible; ST has debt of $1.6 billion off-set by cash and marketable securities of $1.9 billion, although I note Bozotti told the .Morgan Stanley conference that ST had ‘net cash’ of $1.2 billion. Being a simple journo I don’t understand the financial wizardry by which 1.9bn minus 1.6bn = 1.2bn.
ST now send me the following explanation:
Which means you add your $659 million liability to the $369 million net cash you hold and end up with a ‘net financial position’ of $1.064 billin.
I suppose this is what’s called being financially sophisticated – the wondrous ways of the accountancy profession.
ST’s 2011 revenues of $9.73 billion look like shrinking to around $8.3 billion this year – below the level of 2005 when Bozotti became CEO.
ST has made a loss for the last four quarters – the Q3 2012 loss being $478 million.
It is not a pretty picture. The best that can be said about it is that the unfolding disaster is happening in slow motion.
Meanwhile Samsung sits off-stage waiting for the right moment to make its move.