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Ericsson: ST-Ericsson buy “not an option”


Ericsson said that taking full control of its ST-Ericsson joint venture is “not an option”, as it revealed it would record a charge of SEK8 billion ($1.2 billion) related to this business.

Earlier this month ST Microelectronics, its partner in the company, said it plans to leave the loss-making partnership “after a transition period”.

Ericsson said today that it will “continue to explore various strategic options for the future of ST-Ericsson assets”.

It also noted that its current best estimate is that the implementation of the strategic options at hand will require around SEK3 billion of Ericsson funding, the majority of which will be in 2013.

Ericsson reiterated that it believes the modem technology it contributed to the JV “has a strategic value for the wireless industry”. It also said that “a key priority in this process is a successful market introduction of the new LTE modems which Ericsson is certain will be very competitive and needed in the market”.

ST-Ericsson has been loss-making for some time, as it has struggled when migrating from legacy products to new silicon. It has also been hit by a slowdown at one of its key customers, widely believed to be Nokia.

ST-Ericsson announced a new strategy in April 2012, with Ericsson today reiterating that the vendor is “in the middle of executing on [a] company transformation aiming at lowering its break-even point and introducing new technologies”.

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