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Lamouche Resigns From STMicroelectronics, Ericsson Venture

2013-03-11 17:01:18

By Adam Ewing & Marie Mawad - Mar 11, 2013 11:39 AM GMT+0100

ST-Ericsson, the semiconductor venture between STMicroelectronics NV (STM) and

Ericsson AB, said Chief Executive Officer Didier Lamouche resigned as the

shareholders seek to exit the unprofitable business.

Lamouche will step down as president and CEO at the wireless chip venture at

the end of this month to pursue other opportunities, ST-Ericsson said today,

without giving details. The 53-year-old Frenchman also resigned from

Geneva-based STMicroelectronics, the company said in a separate statement.

The former STMicroelectronics chief operating officer was appointed in November

2011 as ST-Ericsson s third CEO in as many years, and was put in charge of

reviewing its strategy. ST- Ericsson hasn t made money since its formation in

2009 as newer smartphone and tablet chips haven t been able to make up for a

decline in sales of older products. The owners are now seeking to pull out of

the venture by the third quarter.

The CEO leaving helps pave the way for action to happen at ST-Ericsson, said

Hannu Rauhala, a Pohjola Bank Oyj analyst in Helsinki. A Chinese company may

be interested in the venture to help build their own chip business for their

own phones or tablets. Buying ST-Ericsson would be an easy way to do it.

Alexis Breton, an STMicroelectronics spokesman in Paris, declined to comment

beyond the company s press release.

Ericsson is still exploring all options and both parent companies are eager to

find a solution, said Karin Hallstan, a spokeswoman at Stockholm-based

Ericsson.

STMicroelectronics fell 1.3 percent to 6.09 euros at 11:34 a.m. in Paris.

Ericsson advanced 1.4 percent to 82.30 kronor on the Stockholm exchange.

Shutdown Looming?

Ericsson recorded an expense of 8 billion kronor ($1.2 billion) for writing off

the value of the venture. On Dec. 20, Ericsson said it s exploring all options

for its half stake and didn t rule out closing down the unit. JPMorgan Chase &

Co. (JPM) is advising STMicroelectronics on its strategy.

The Geneva-based venture has also suffered because of less demand from handset

customers such as Nokia Oyj (NOK1V) and BlackBerry. To reduce costs, Lamouche

unveiled plans to eliminate 1,700 jobs last year and transfer the development

of some of the more advanced processors to STMicroelectronics.

Didier Lamouche came into ST-Ericsson when the company was in a very

challenging situation and has been instrumental in bringing the company to the

point where it is more focused on strategy execution, a much lower breakeven

point and positive momentum where the new LTE modem-based products are ready

for market introduction this year, Ericsson CEO Hans Vestberg said in today s

statement.

Scaling Down

Lamouche said a year ago that he wants to cut some of the venture s 44 research

sites to reduce expenses. Its biggest sites are in Lund, Sweden, and Grenoble,

France. The venture has about 5,000 employees, according to a 2012 company

document.

STMicroelectronics, which is 27.5 percent owned by the French and Italian

governments, may face political hurdles as it moves forward with job cuts. In

France, Socialist President Francois Hollande and Industry Minister Arnaud

Montebourg have pushed back against companies scaling down. Montebourg in

October hosted STMicroelectronics Chairman Didier Lombard at Bercy, France, to

discuss strategy.

To contact the reporters on this story: Adam Ewing in Stockholm at

aewing5@bloomberg.net; Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at

kwong11@bloomberg.net