mannerisms

Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.

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.

Tags: analogue, business activities, mems, penalver, us bank

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22 Comments

  1. David Manners
    October 14, 2012 00:04

    It’s early days, Anonymous, the denials from both sides are unconvincing. No ST exec has put his name to a denial. And the Bloomberg story is just that ST is considering the break-up. There’s no denial from ST that it’s considering it. So it looks as if ST is now in play and, if the shares go up on the rumour of a break-up then ST execs are going to be under pressure to defend a decision not to implement the analogue/digital split.

  2. Anonymous
    October 13, 2012 13:11

    According to Bloomberg News: Samsung denies plans to buy STE.
    All possibilities exhausted, now left to do is ‘executing’ the “Final Solution”.

  3. Bitter
    October 12, 2012 23:18

    What could possibly be worse than having to work for, and watching, the pretentious faces of the STE elitist minions running from the first meaningless meeting in the morning to the next until the early evening.

  4. AnotherAnonymous
    October 12, 2012 16:45

    I’m just happy I was let go in the April redundancy rounds when STE still had the money to pay me my severance. Totally happy at the new job I’m now much better off than before…

  5. David Manners
    October 11, 2012 17:38

    Is that so, speculate? Very interesting. Is this the price with the purchaser assuming the $1.2 billion debt and the 175 million Euro redundancy liability, one wonders.

  6. Bitter
    October 11, 2012 17:11

    D Lamouche definitely need some good luck selling this pigsty. The group-think mediocreness of the STE careerist hordes for sure must be a hard sell, irrelevant of how much lipstick and perfume slapped on the minions.
    Perfect time for D.L. and the rest of upper management to bump up the bonuses and “competence retention salary increases” before this sad farce goes belly up.

  7. speculate
    October 11, 2012 16:16

    Seems like the price tag is 400 MUSD for the whole STE, according to pareto bank

  8. shyam
    October 11, 2012 12:13

    Are they doing well in china at least?
    Samsung coming in would be interesting.
    Did they do well enough to bring L9540 in or is it just the U8520

  9. Bharat
    October 11, 2012 09:25

    I think Galaxy S3 mini should have L9540 clocked at 1.85GHz not at 1 GHz as mentioned in these blogs.

  10. Anonymous
    October 10, 2012 22:55

    Neither is the stock market – Samsung share price plunging.

  11. Anonymous
    October 10, 2012 20:27

    As per my information the blogosphere isn’t too impressed with the name trickery Samsung and STE pulled.
    http://www.engadget.com/2012/10/10/samsung-galaxy-s-iii-mini/
    http://gizmodo.com/5950477/samsungs-galaxy-s-iii-mini-might-have-shrunken-specs-too

  12. Bitter
    October 10, 2012 19:03

    Will the potential buyers fall for the shoddy u8500 based badge engineered “Galaxy S3″ name dropped con job.
    Time Will Tell.

  13. Bharat
    October 10, 2012 14:53

    As per my information Samsung Galaxy S3 mini due to launched tomorrow is using STE hardware.

  14. Cain
    October 10, 2012 14:43

    Well at least they got a design win now with the Samsung galaxy III mini. Seems like a relatively new chip too. I can definitely see them getting some momentum, especially now when TI has thrown in the towel. Nokia is rumoured to have some WP-phones coming with STE also. Would be a shame to sell it now when its finally getting a little better, but I can imagine that Ericsson is pretty tired of their joint venture by now.

  15. David Manners
    October 10, 2012 13:55

    I assume the IP portfolio has value, Bitter. They have some great engineers. But I agree it’s tricky to see the value. It’s losing $250m a quarter with $1.2bn debt piled up. Redundancy liabilities are around Euros 175m. The shareholders want it sold because otherwise it will bring down ST. Intel doesn’t seem to have done much with the Infineon wireless acquisition. Samsung might want a baseband and some protective IP sufficiently to take it. But not for much.

  16. Bitter
    October 10, 2012 12:43

    I wonder what exactly they are supposed to be selling?
    Their products and technology of lately haven’t exactly been flying of the shelves?
    Also, I’m not so sure Ericsson is too eager on giving the modem IP’s and patents that possible go with the sale to network competitors such as Samsung.
    Perhaps Apple then, they could have use of Thor in their iPhone?

  17. David Manners
    October 10, 2012 12:28

    Oh yes, mgp-1, J P Morgan will make a fortune out of it but they need it – they’ve got a Mr T Blair on the payroll which no doubt costs them a fortune.

  18. mgp-1
    October 10, 2012 10:25

    but bonus all round no doubt for arranging the sell off :-)

  19. David Manners
    October 09, 2012 21:59

    Very possible, Bitter. The bankers may just be there to protect the ST management from the shareholders – i.e. to warrant that the solution, whatever it imay turn out to be, is the best one available.

  20. Bitter
    October 09, 2012 20:29

    3. Maybe a TI-influended exit, holding on to patents and IP’s while winding down the doomed experiment?
    Though, how does the bankers enter this hypothetic scenario, I wonder? Perhaps financing the “christmas” presents for the redundancies, so to speak?

  21. David Manners
    October 09, 2012 16:05

    My thoughts Bitter, are these: Either:
    1. They’ve found a buyer, probably Samsung, and need a banker to tie up the financial side. Or:
    2. They’ve exhausted every possibility with every potential buyer and, in desperation, ST’s new CSO, Georges Penalver, appointed three weeks ago and a financial type, has turned to Wall Street to try and find ST a way out.

  22. Bitter
    October 09, 2012 15:54

    I am torn here.
    I was considering Scientology to offer the help STE desperately needs, since they promise an awesome afterlife riding a spaceship.
    On second thought, they might also have the same credibility issues as the banker boys?
    Can’t really decide here. David, can’t you offer some illuminating reflections and comments of clarity?

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