ST Micro says may need $500 mn to leave ST-Ericsson

Jan 31 2013, 11:55 IST
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SummaryST Microelectronics posted a quarterly net loss and said it could need as much as $500 million.

ST Microelectronics posted a quarterly net loss and said it could need as much as $500 million to get out of its struggling mobile chip joint venture with Ericsson.

The European chipmaker said in its earnings report on Wednesday it is finalizing what to do with ST-Ericsson after announcing in December it would exit the money-losing business.

"STMicro) could have funding requirements, including the ongoing operations of ST-Ericsson during the transition period and restructuring costs, in the range of approximately $300 million to $500 million during 2013, taking into account the impact of the strategic options," the company said.

STMicro and Ericsson formed ST-Ericsson in 2008 but the mobile chipmaker has failed to make a profit. It has not won enough new customers to compensate for the major drop in business from Nokia, which has lost out to Apple and Samsung Electronics.

Analysts said ST-Ericsson, which has around 5,000 employees, could be shut down entirely, or parts could be sold to competitors such as Intel, Broadcom or Samsung.

STMicro, which also makes chips for cars, computers and televisions, had a fourth-quarter net loss of $428 million, compared with a net loss of $11 million the same quarter a year earlier.

It reported fourth-quarter revenue of $2.162 billion, down from $2.191 billion in the year-ago quarter.

STMicro said current-quarter revenue would fall 7 percent sequentially, plus or minus 3.5 percentage points.

Analysts on average expected fourth-quarter revenue of $2.148 billion, according to Thomson Reuters I/B/E/S.

ST-Ericsson had a fourth-quarter operating loss of $169 million, compared with an operating loss of $241 million in the year-ago period.

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