STMicro Shares Advance as Adviser Reviews ST-Ericsson

STMicroelectronics NV (STM) rose the most in more than two months as Europe’s largest semiconductor company and Ericsson AB said they’re working with an adviser on options for their unprofitable chipmaking venture ST-Ericsson.

“It is natural for the parent companies to continuously review the strategy” of the venture, the two partners said in a statement today, adding that they’re working “to ensure the best possible future” for the unit. STMicroelectronics gained as much as 5.5 percent to 4.55 euros, the biggest intraday advance since Aug. 3.

The 50-50 partnership hasn’t turned profitable since it was formed in 2009. Geneva-based ST-Ericsson said in July the second-quarter net loss widened to $318 million from $221 million a year earlier. In April the venture announced a plan to eliminate 1,700 jobs and on July 1 completed the transfer of its application processor development team to STMicroelectronics as part of a program to trim costs.

“ST-Ericsson is too small for its research and development to remain competitive,” said Hakan Wranne, a Stockholm-based analyst at Swedbank AB. “It’s something they should divest. It’s hard to find a reason for them to keep the company.”

STMicroelectronics was up 5.3 percent as of 2:35 p.m. in Paris trading, giving the company a market value of 4.13 billion euros ($5.35 billion).

ST-Ericsson mandated JPMorgan to study strategic options, Les Echos reported today. The newspaper also reported that STMicroelectronics and the French state are in talks on research and development investments at a nanotechnology plant in Crolles, southeastern France.

To contact the reporters on this story: Chiara Remondini in Milan at cremondini@bloomberg.net; Francesca Cinelli at fcinelli@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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