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Ericsson report weak financial performance and relations with ST-Ericsson

Thursday, 20 December 2012
Ericsson today announced that it will take a non-cash charge of approximately Skr8billion in Q4, 2012 related to its 50 percent stake in ST-Ericsson. The total effect on Ericsson Group Net Income Q4, 2012, is approximately Skr -8 billion (non-cash), with no tax effect.
On December 10, 2012, STMicroelectronics announced its intention to exit as a shareholder in ST-Ericsson.

The cost includes write-downs of assets to reflect the current estimated market value of Ericsson's share in the joint venture, according to a press release.

ST-Ericsson announced its strategic plan in April 2012 and is in the middle of executing on company transformation aiming at lowering its break-even point and introducing new technologies. On October 9, 2012, the two parent companies announced a strategic review of the business plan and the future ownership structure.

Ericsson continues to believe that the modem technology, which it originally contributed to the JV, has a strategic value for the wireless industry. For Ericsson, 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.

Ericsson will continue to explore various strategic options for the future of ST-Ericsson assets. To acquire the full majority of ST-Ericsson is, however, not an option. Ericsson's current best estimate is that the implementation of the strategic options at hand will require approximately Skr 3 billion of Ericsson funding, of which the majority in 2013.
News source: Ericsson

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