ST-Ericsson parents may pull the plug

Dylan Bushell-Embling
14 Mar 2013
Daily News

ST-Microelectronics and Ericsson have reportedly ended a fruitless three-month search for a buyer of their ST-Ericsson wireless semiconductor joint venture.

Six separate sources told Bloomberg that the parents were unable to find an interested bidder, and are now considering winding up the venture instead of selling it off.

ST-Ericsson has reportedly accumulated $2.7 billion losses since its inception in 2009. As a result, both parents want out by the third quarter.

The future of the joint venture has been in doubt for some time. ST-Ericsson last year announced a plan to cut 1,700 jobs to help stem its losses, but this wasn't enough to bring it to profitability.

The JV's losses forced Ericsson to take an 8 billion kronor ($1.24 billion) writedown for its fourth quarter, which was a key contributor to the quarter's 6.3 billion kronor net loss.

The Bloomberg report suggests that instead of shutting down the JV entirely, the parent companies may try to reincorporate some of its operations back into their businesses. This could help stem the flow of job losses that will result from a closure.

As the venture is 27.5% owned by the French and Italian governments, and employs 1,200 people in France alone, limiting staff cuts may help get the governments on board for a shut-down.

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