Ericsson and STMicroelectronics Agree on Strategic Way Forward for ST-Ericsson
GENEVA -- (Marketwire) -- 03/18/13 -- Ericsson (NASDAQ: ERIC) and
STMicroelectronics (NYSE: STM) today announced an agreement on the
way forward for the joint venture (JV) ST-Ericsson. As communicated
by the parent companies in December 2012, both have been working
together toward a strategic solution for the JV. After months of
intensive joint work, the parent companies have selected the
strategic option which maximizes their respective future prospects
and growth plans.
The main steps agreed upon to split up the JV are the following:
-- Ericsson will take on the design, development and sales of the LTE
multimode thin modem products, including 2G, 3G and 4G multimode
-- ST will take on the existing ST-Ericsson products, other than LTE
multimode thin modems, and related business as well as certain
assembly and test facilities
-- Starting the close down of the remaining parts of ST-Ericsson.
The formal transfer of the relevant parts of ST-Ericsson to the parent
companies is expected to be completed during the third quarter of
2013, subject to regulatory approvals.
After the split up it is proposed that Ericsson will assume
approximately 1,800 employees and contractors, with the largest
concentrations in Sweden, Germany, India and China.
It is also proposed that ST will assume approximately 950 employees,
primarily in France and in Italy, to support ongoing business and new
products development within ST.
Today, it is also announced that Carlo Ferro is appointed President
and Chief Executive Officer of ST-Ericsson, effective April 1, 2013.
Ferro is currently Chief Operating Officer of ST-Ericsson and
succeeds Didier Lamouche who, as previously announced, will pursue
opportunities outside the company. Ferro will lead the work in
securing both business continuity of ST-Ericsson and effective
completion of the transition phase.
Hans Vestberg, President and CEO, Ericsson and Chairman of the Board
of Directors, ST-Ericsson said: "I welcome Carlo Ferro as the new
President and CEO of ST-Ericsson. Carlo has over twenty years of
experience in the semiconductor industry and a strong track record in
driving and managing com
plex transformation projects. He has been a
contributor to the solid progress ST-Ericsson has made the past year
in terms of strategy execution and significantly lowering the
"In line with what we announced in December last year, we have now
moved to the next step of our exit process and found a solution with
Ericsson that fully aligns with our new strategy", said Carlo
Bozotti, President and CEO of ST. "The agreement made with Ericsson
represents a major step forward in reaching our new financial model
target and allows us to further strengthen the skillsets of our
company, by welcoming in ST, at completion, additional strong
competences to fuel growth in specific key product areas. Moreover,
it protects and leverages the ongoing ST-Ericsson's business,
allowing us to reinforce our relationships with key customers, both
of ST and of ST-Ericsson".
With the proposed transfer of competencies from ST-Ericsson, ST will
further strengthen its capabilities in the areas of application
processors, RF, analog and power as well as software and complex
system integration. In addition, ST-Ericsson's portfolio includes
devices that are complementary to ST's focus on the fastest growing
segments of the wireless semiconductor market, such as
system-optimized analog mixed signal and power management devices,
high-quality, low-power audio and video enhancements and innovative
energy harvesting solutions.
The agreement is fully in line with ST's financial model target of an
operating margin of 10 percent or more and with plans to reduce
quarterly net operating expenses to an average quarterly rate in the
range of $600 million to $650 million by the beginning of 2014.
In addition, as a result of the agreement, ST expects to incur cash
costs, including the covering of ST-Ericsson's ongoing operations
during the transition period and its restructuring costs, in the
range of approximately $350 million to $450 million, narrower than
the range provided at the end of January 2013.
This Press Release contains statements of future expectations and
other forward-looking statements (within the meaning of Section 27A
of the Securities Act of 1933 or Section 21E of the Securities
Exchange Act of 1934, each as amended). These statements include
expectations regarding our new strategic plan, including expected
benefits, future financial and operating results and expectations
regarding events or developments that we believe or anticipate will
or may occur in the future. These statements are based on
management's current views and assumptions, and are conditioned upon
and also involve known and unknown risks and uncertainties that could
cause actual results, performance or events to differ materially from
the forward-looking statements contained in this Press Release. Such
risks and uncertainties include the continuing difficult
macro-economic and industry conditions and trends in the
semiconductor sector and the other risks detailed in our filings with
the Securities and Exchange Commission in particular our Annual
report on Form 20F filed on March 4, 2013. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially which
could have a material adverse effect on our business and/or financial
condition. We do not intend, and do not assume any obligation, to
update any forward looking statements set forth in this Press
STMicroelectronics Conference Call and Webcast information
The press release will be available immediately after publication on
the Company's website at www.st.com.
The management of STMicroelectronics will conduct a conference call
on March 18, 2013 at 9:00 a.m. Central European Time / 4:00 a.m. U.S.
Eastern Time, to discuss the agreement with Ericsson, followed by a
Q&A session. Dial-in information is:
+41 58 310 5000 (Europe)
203 059 5862 (UK)
+1 866 291 4166 (USA)
A live webcast of the conference call will also be available via the
Internet by accessing http://investors.st.com.
ST is a global leader in the semiconductor market serving customers
across the spectrum of sense and power and automotive products and
embedded processing solutions. From energy management and savings to
trust and data security, from healthcare and wellness to smart
consumer devices, in the home, car and office, at work and at play,
ST is found everywhere microelectronics make a positive and
innovative contribution to people's life. By getting more from
technology to get more from life, ST stands for life.augmented.
2012, the Company's net revenues were $8.49 billion. Further
information on ST can be found at www.st.com
Biography for Carlo Ferro
Carlo Ferro has been the Chief Operating Officer (COO) of ST-Ericsson
since February 2012.
He has been a Senior Executive Vice President and Chief Financial
Officer of STMicroelectronics since May 2003 and over time his
responsibilities have been extended to include investor relations,
treasury, corporate communication, operation planning, procurement
and logistics. He has also been a member of ST's Corporate Strategic
Ferro joined ST in 1999 as Group Vice President Corporate Finance. In
2002, he became Deputy CFO, and was promoted to Chief Financial
Officer in 2003.
With ST-Ericsson, Ferro led the execution of a transformation and
restructuring plan that allowed the Company to substantially lower
its break-even point and reduce its losses by 55% in three quarters
while accelerating new-product development by improving R&D
efficiency. After Ferro joined the Company, ST-Ericsson showed
improved discipline in execution, delivering on or above target on
almost all metrics in all quarters. During his tenure as COO,
employee motivation and confidence in the management team improved
thru the period, as measured by a substantially increased score in
the employee engagement survey.
As ST's CFO, Ferro has contributed to executing a strategy of growth
combined with financial discipline: from 2005 through the end of
2011, ST grew its revenues by about 6% CAGR (ex. divestitures) and
improved its net cash balance by $1.4 billion. In addition, through
the market turmoil of 2008-2011, ST maintained a solid capital
structure, improving its net financial balance and maintaining a
credit rating well above investment grade, while both substantially
investing to fuel business growth and increasing the dividend
distribution. Ferro inspired and delivered on ST's strategy of a
focused product portfolio that led to the creation of Numonyx, a
merger of the flash memory businesses of ST and Intel. He also drove
the subsequent merger of Numonyx into Micron Technologies that
allowed ST to improve its capital structure by about $1 billion and
Numonyx' employees to join a sustainable worldwide leader in
memories. With ST, Ferro oversaw several major restructuring efforts
that led to a consolidation of the number of silicon fabs from 17 to
8 and the reduction of the number of non-manufacturing sites by about
one third. Focusing on execution and financial discipline, under his
tenure as CFO, ST posted quarterly results within guidance for 33
quarters out of 35. Recognizing his credibility and care of public
investors, in 2006 Ferro was recognized to be among the best European
CFOs by Institutional Investor.
At Finmeccanica, the leading Italian high-tech engineering and
manufacturing group and, at that time, a shareholder of SGS-THOMSON
Microelectronics (now STMicroelectronics) from 1992 to 1996, Carlo
Ferro gained extensive experience in Planning and Control, Corporate
Finance and M&A. In fact, he was part of the ST IPO team in 1994 and
had been associated as an expert to the ST Supervisory Board. Over
the next three years, he held executive positions for Elsag Bailey
Process Automation NV (EBPA), a global leader in process automation
listed on the NYSE, first as Vice President for Strategic Planning,
and later as Vice President for Planning and Control and principal
financial officer, leading these functions in phases of acquisitions
and consolidation until the merger between EBPA and ABB.
Ferro had been the Chairman of Incard SA, the sole Managing Director
of ST Service Srl, a member of the Board and Chairman of the Audit
Committee of ST-NXP Wireless and ST-Ericsson till February 2012. He
has also been a member of the governance bodies of several companies,
including STS (a manufacturing JV in China), ST's affiliates in
Singapore, Japan, France and Italy, a former joint-venture between ST
and Hitachi, DNP Photomask Europe, and, earlier in his career, of
several companies in process automation, engineering, transportation,
electronic and power generation businesses.
A Swiss and Italian citizen, born in Savona, Italy, in 1961, Carlo
Ferro is married with two children. A graduate in Business and
Economics from the LUISS Guido Carli University in Rome, where he
served as a professor of Planning and Control and as an associate
professor of Advanced Finance in various periods. He is a Certified
Public Accountant registered in Italy.
Ericsson and ST agree on ST-Ericsson:
For further information, please contact:
Group VP, Investor Relations
Tel: +1 602 485 2064
Director, Corporate Media and Public Relations
Tel: +33 1 58 07 77 85
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