'ST's cash and cash equivalents, marketable securities and restricted
cash equalled $2.07bn and total debt was $1.54bn,' say ST's Q2 results.
ST-Ericsson is running up debt at $250m to $300m a quarter and STMicroelectronics is responsible for half that debt. So, on present trends it looks as if the company will run out of money about this time next year.
Negotiating with the French government for a bail-out must be embarrassing for ST CEO Carlo Bozotti who received a $1.5 million bonus in 2011 for leading the company to the same revenue run-rate it had in 2005 when he took over as CEO.
Of course there are things ST could do to avoid insolvency. One is to spin off the Analogue, Automotive and Power segment which has profitable revenues of around $7bn.
That would avoid it being dragged down by the digital VLSI business.
The writing on the wall for the digital VLSI business came when ST did not equip the 300mm Catania fab built by former CEO Pasquale Pistorio for which Pistorio had secured a government grant of over half a billion euros.
Not building the fab means that ST does not have the capacity to expand in digital VLSI at a time, like now, when advanced capacity is tight.
Also ST is looking for FD-SOI volume capacity - so far only promised by Globalfoundries - because ST hasn't got the capacity to make volume FD-SOI itself.
If the French government does not bail-out ST, then a break-up seems likely. The only alternative would be insolvency.
Which raises the intriguing question? If ST goes bankrupt, will Bozotti get a bonus?