Ericsson : Ericsson and STMicroelectronics agree on strategic way forward for
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
complex 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 breakeven point."
"Ericsson continues to believe that the thin modems hold a strategic value to
the wireless industry. With this move Ericsson will create a highly focused
"thin modem only" operation - an area in which both parents have invested
significant amounts to establish industry leading technology and Intellectual
Property," said Hans Vestberg. "Initial customer contacts give support to the
belief that our modems will meet the requirements of the manufacturers in the
rapidly growing smartphone and tablet market."
As previously communicated, Ericsson has made provisions of SEK -3.3 b. in
2012 which will cover costs related to the implementation of the strategic
option. Once the multimode thin modem business has been fully integrated into
Ericsson in Q4 the operation will be reported as a standalone segment. Our
current best estimate is that it will generate operating losses of
approximately SEK 0.5 b. in Q4, 2013, primarily related to R&D expenses.
The thin modem technology developed within ST-Ericsson has evolved into a
unique architecture for low power, highly integrated multimode multi-band
modems covering GSM/GPRS/EDGE, TD-SCDMA, HSPA+, LTE (TDD/FDD), LTE-Advanced,
the widest array of frequency bands and a feature set that includes Single RF
Chip Carrier Aggregation, VoLTE and IMS.
An LTE/HSPA+/3G/2G modem based on this evolved architecture was recently
demonstrated at Mobile World Congress in Barcelona and has received its first
global operator certification.
CONFERENCE CALL FOR ANALYSTS, INVESTORS AND MEDIA
The conference call for financial analysts, investors and media will begin at
14:00 CET (13:00 UK time, 09:00 Eastern Daylight Time in the US, and 22:00
local time in Japan). CFO Jan Frykhammar and Chief Strategist Douglas
Gilstrap, will comment on the announcement and take questions.
Sweden: +46 8 505 202 70 (toll free Sweden: 0200-125785)
International/UK: +44 208 817 93 01 (UK free phone 0800 634 5205)
US: +1 718 354 12 26
Confirmation number: 10287746
(Participants will have to enter the confirmation number when dialing into the
Please call in at least 15 minutes before the conference call begins. As there
are usually a large number of callers, it may take some time before you are
A live audio webcast of the conference call will be available at
www.ericsson.com/investors and www.ericsson.com/press.
NOTES TO EDITORS
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Ericsson is a world-leading provider of communications technology and
services. We are enabling the Networked Society with efficient real-time
solutions that allow us all to study, work and live our lives more freely, in
sustainable societies around the world.
Our offering comprises services, software and infrastructure within
Information and Communications Technology for telecom operators and other
industries. Today 40 percent of the world's mobile traffic goes through
Ericsson networks and we support customers' networks servicing more than 2.5
We are more than 110,000 people working with customers in more than 180
countries. Founded in 1876, Ericsson is headquartered in Stockholm, Sweden. In
2012 the company's net sales were SEK 227.8 billion (USD 33.8 billion).
Ericsson is listed on NASDAQ OMX, Stockholm and NASDAQ, New York stock
FOR FURTHER INFORMATION, PLEASE CONTACT
Ericsson Corporate Communications
Phone: +46 10 719 69 92
Ericsson Investor Relations
Phone: +46 10 719 00 00
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Source: Ericsson via Thomson Reuters ONE
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