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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