ST Not Becoming A Holding Company, says Carlo Ferro
STMicroelectronics is not becoming a financial holding company with its operating units spun off into separate entities, despite the two joint ventures it has entered into this year, according to the company’s Chief Financial Officer, Carlo Ferro.
”We are not transforming ST into a holding company”, Carlo Ferro, CFO of ST, told a recent analysts’ meeting in London.
Earlier this year, ST completed the divestment of its flash business into a joint venture with Intel called Numonyx in which ST owns 48.6 per cent of the equity, and put its wireless business into a joint venture with NXP in which ST holds 80 per cent share with a right to buy out the rest.
Ferro said that, after a $70 million charge for the Numonyx deal, ST would not be liable for any outgoings in respect of the joint venture. “We have no plans for future financial assistance”, he said.
Asked if the company expected a positive contribution from Numonyx in the second half of the year, ST CEO, Carlo Bozotti, replied: “I expect Q1 will be accretive for ST compared to the previous situation.” Asked to expand on that, Bozotti replied: “Accretive compared to what we had before, but the target is to be positive.” Asked if Numonyx could be profitable in Q4, Bozotti replied: “Could be.”
The NXP-ST joint venture which creates a company with $3 billion revenues, making it the third largest wireless chip company in the industry, will also be self-financing after the payment of the initial $1.55 billion to NXP.
“The $1.55 billion to be paid to NXP will come from our current cash position”, said Ferro, “and the exit payment in three years time will be funded by future free cash flow. There is no need for further financing.”Tags: carlo ferro, cash position, chief financial officer, free cash flow, separate entities