Pain Worsens At ST

Struggling STMicroelectronics took a $544m charge against its Q4 earnings resulting in a Q4 loss of $428m.

The charge relates to the intended divestment in Q3 of its 50% share in wireless jv ST-Ericsson.

ST-Ericsson says that its parents STMicroelectronics and Ericsson have cancelled the $1.5bn debt owed to them by ST-E.

Presumably this means that ST has taken its share of half of the ST-E debt onto its own balance sheet.

By waiving the debt owed to its parent companies, ST-E can be sold, or otherwise divested, debt-free.

ST-E currently has cash of $37m and no debt, though it has total liabilities – trade bills, pension responsibilities, termination liabilities etc –  of $528m.

ST says it expects to incur another $300-500m in charges this year to complete the divestment of ST-E dependent on the form the divestment takes.

ST says it has net cash of $1.19bn.

Clearly this is going to be a difficult year, cash-wise, for ST.

Presumably in preparation for these difficulties, capex in 2012 was slashed  to $476m from $1.26bn in 2011.

ST’s Q4 revenues were $2.162bn which takes 2012 revenue to $8.49bn which is below the level when current CEO Carlo Bozotti took over from former CEO Pasquale Pistorio in 2005. In 2005, Pistorio’s last year as CEO, ST had revenues of $8.88bn.

Every operating segment at ST suffered a decline in revenues in Q4 with the exception of the analogue, MEMS and microcontroller segment which saw revenues increase 16% to $864m compared to $804m in Q3 and $747m in Q42011.

ST expects Q1 to show a further 7% decrease in sales largely because ST-E expects a “very significant sequential decrease in net sales.”

ST-E’s Q4 sales were flat with Q3 at $358m for an “adjusted” loss of $133m.

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