Is Ericsson Expecting ST-Ericsson Shut-Down?

It looks as if Ericsson is preparing for a shut-down of its ST-Ericsson jv with STMicroelectronics as it announces it will not buy out ST, and will take a Q4 write down  charge of $1.2bn for the value of its share in the jv..

ST has said it will exit the jv by Q3 but hasn’t said how.

Ericsson and ST put $1.8bn cash into the jv in 2008. ST paid NXP $1.7bn for NXP’s wireless operations.

Ericsson says that its share of the operating loss from the jv  is $1.42bn.

Ericsson also says that it expects to incur another $450m of  costs before it can get out of the jv.

ST has said it expects to incur another $550m of costs from the jv before it exits in Q3.

ST-Ericsson had incurred debts of $1.35bn by the end of September. It has cash of $39m.

Swedish analyst Lars Soederfjell told Bloomberg: it “sounds like a preparation to shut the venture down.”

There is always a chance, of course, that Samsung will take STE off ST and Ericsson’s hands at the last moment. But you can be sure it won’t be much of a deal for ST or Ericsson.

Tags: debts, samsung, stmicroelectronics

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10 Comments

  1. Bitter
    January 19, 2013 09:04

    Burning midnight oil doing the busywork is only good for careerists in mismanaged organization’s (such as STM/STE/Ericsson/Sony) branches in asia.
    “Lazy” europeans could grow the ST revenue and profits under Pistorio’s watch. What the current ST “leadership” announces can thus be taken with a big pinch of salt.
    What needs to be done for european telecoms and semi industry is dumping the hordes of overpaid muppets in management.
    Profits will follow.

  2. Anonymous
    January 18, 2013 17:36

    STE staff in China and Korea try to work 10 to 12 hours per day. But in Europe, Sweden and France, staff don’t work such a long time. On summer, they are always on holiday for 3 or 4 weeks. Nowadays education and knowledge on mobile are really no difference. As ST annoucement in Dec 10 2012, the area (mobile chip) belongs to America and Asia. Engineers in the two regions work much harder than those in Euro. That’s why Europe lose Sony-Ericsson, Nokia, ST-NXP, NSN and so on? Now Samgsun/HuaWei/ZTE become more powerful, year by year. The same reason leads Europe economic crisis. Therefore if European plan to compete with USA and Aisa, it is a long way to go.

  3. January 15, 2013 11:55

    On a positive note… we have been on-site to ST-E in UK to help with redundancies when they closed the site and worked closely in Europe with the other redundancies and have now placed 50+ ST-E people a year over the last few years, highly sought after people we can always place! :)

  4. passenger
    January 11, 2013 01:09

    It is because mobile chip is too easy to do nowadays. You see so many companies including chinese making the same designs.
    education, knowledge make no differences, they use same thing from ARM, so cost and work hard make really difference.
    I don’t know if anyone in STE wants to work 12 hours, 7 days in a week.

  5. David Manners
    December 20, 2012 20:29

    Well anon, ST is saying Q3 for the exit so you could have been 100% spot on.

  6. anon
    December 20, 2012 19:57

    When I was made redundant by STE in September, I told my colleagues (who were in the same boat) that I wouldn’t give STE more than a year before it implodes.
    Looks like I may have been overly optimistic…

  7. David Manners
    December 20, 2012 18:34

    That explains everything, Bitter, bureaucrats can’t devise winning technology strategies

  8. Bitter
    December 20, 2012 18:20

    Well, it took about a decade for the Swedish highly-educated mediocracy to purge out all of the elite engineers, the innovators and risk-takers from EMP/STE and now, here we are.
    The elitist bureaucrats for sure won all the battles but lost the war.

  9. David Manners
    December 20, 2012 17:22

    I’ve said this before but what seems weird to me is that ST and Ericsson have done nothing that I can see to sort out this situation which has been worsening for three years, Bitter. It’s the slowest moving train wreck in history. The execs just seem to follow a process – they have come up with no initiatives to revitalize the company. When mobile is such a great market and STE makes mobile chips, why hasn’t anyone at ST or STE figured out a way to make money from it? And, as you say, if they can’t sort out STE, what hope do ST and Ericsson have of sorting out their own problems?

  10. Bitter
    December 20, 2012 17:10

    Somewhere in this sad story also lies the future of STM and Ericsson: “Like father, like son”
    Thus not much respite time for the bureaucrats abandoning STE for the “benefit” of the parents.

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