Ericsson promises to stick with ST-Ericsson - Mobile World Live

Ericsson promises to stick with ST-Ericsson

27 OCT 2011

Ericsson has ruled out the possibility of selling its stake in loss-making semiconductor company ST-Ericsson, despite its decision today to exit its handset joint venture with Sony.

“We will continue of course to work with ST-Ericsson… we will keep that relationship,” asserted Ericsson’s CEO Hans Vestberg during the firm’s press conference with Sony this morning.

Headquartered in Geneva, Switzerland, ST-Ericsson was established as a 50/50 joint venture by STMicroelectronics and Ericsson in February 2009. However, the venture has struggled ever since its formation, and announced a net loss of US$211 million for the third quarter of 2011, compared with a loss of US$121 million in the third quarter of 2010.

Some analysts have called for Ericsson to call time on the venture in an effort to focus on its core networking and global services proposition (an argument that will likely strengthen in light of today’s Sony Ericsson news).

At the time of ST-Ericsson’s results announcement earlier this month, co-parent Ericsson said that it “still believes in [ST-Ericsson’s] recovery to profitability and positive operating cash flows,” but that “in the event of a significant worsening of the current market conditions, we may consider additional actions to improve performance.” Ericsson took a hit of SEK0.6 billion (US$94.3 million) during its own third quarter due to the ST-Ericsson jont venture.

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Justin Springham

Justin manages the editorial content for the Mobile World Live portal and award-winning Mobile World Live TV service. In the last few years Justin has launched and grown a portfolio of premier media products, which include the Mobile World Congress...

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