ST-E Asks US Bank To Sort It Out
When you need a bank to sort out your problems you are in deepest doo-doo. Unwilling, or unable to solve its own problems, ST-Ericsson has appointed the US bank J.P.Morgan to tell it what to do. ST-E and STMicroelectronics seem to be saying that their own efforts to solve their problems have failed.
ST-E has appointed the US bank, J.P.Morgan to find a way out of its troubles, according to the French newspaper Les Echos.
Last month Georges Penalver, formerly at Sagem and France Telecom and a general partner at US-based investment fund Cathaya Capital, was appointed Chief Strategy Officer of ST.
At the same time it was announced that the previous Corporate Strategy Officer, Philippe Lambinet, was leaving ST.
Today, Les Echos says ST-E is looking at finding a new partner, as well as spinning off some of its business activities, such as modems, connectivity, power management systems and software.
STMicroelectronics could also take over more of ST-E’s operations, says Les Echos.
STMicroelectronics has two big problems: one is ST-Ericsson which has run up debt of $1.2bn since starting trading in 2009. It is losing $250m a quarter.
The other big problem is a collapse in sales at ST. From $9.73bn in sales last year, sales are expected to be $8.6bn this year – about the same level as they were when the current CEO took over in 2005.
On the one hand ST has a solid business in MEMS, discretes, power semiconductors and analogue, on the other hand it has slipped in digital products.
When Penalver was appointed in mid-September, it was said he would report with a new strategic plan in December. Les Echos says the plan is to have the issue sorted by year-end.