STOCKHOLM, SWEDEN -- (Marketwire) -- 03/18/13 -- Ericsson (NASDAQ: ERIC) andSTMicroelectronics (NYSE: STM) today announced anagreement on the way forward for the joint venture (JV) ST-Ericsson. Ascommunicated by the parent companies in December 2012, both have beenworkingtogether toward a strategic solution for the JV. After months of intensivejointwork, the parent companies have selected the strategic option whichmaximizestheir 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 LTEmultimode thin modem products, including 2G, 3G and 4G multimode
* ST will take on the existing ST-Ericsson products, other than LTEmultimode 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 parentcompaniesis expected to be completed during the third quarter of 2013, subject toregulatory approvals.
After the split up it is proposed that Ericsson will assume approximately1,800employees and contractors, with the largest concentrations in Sweden,Germany,India and China.
It is also proposed that ST will assume approximately 950 employees,primarilyin France and in Italy, to support ongoing business and new productsdevelopmentwithin ST.
Today, it is also announced that Carlo Ferro is appointed President andChiefExecutive Officer of ST-Ericsson, effective April 1, 2013. Ferro iscurrentlyChief Operating Officer of ST-Ericsson and succeeds Didier Lamouche who, aspreviously announced, will pursue opportunities outside the company. Ferrowilllead the work in securing both business continuity of ST-Ericsson andeffectivecompletion of the transition phase.
Hans Vestberg, President and CEO, Ericsson and Chairman of the Board ofDirectors, ST-Ericsson said: "I welcome Carlo Ferro as the new Presidentand CEOof ST-Ericsson. Carlo has over twenty years of experience in thesemiconductorindustry and a strong track record in driving and managing complextransformation projects. He has been a contributor to the solid progressST-Ericsson has made the past year in terms of strategy execution andsignificantlylowering the breakeven point."
"Ericsson continues to believe that the thin modems hold a strategic valuetothe wireless industry. With this move Ericsson will create a highly focused"thin modem only" operation - an area in which both parents have investedsignificant amounts to establish industry leading technology andIntellectualProperty," said Hans Vestberg. "Initial customer contacts give support tothebelief that our modems will meet the requirements of the manufacturers intherapidly growing smartphone and tablet market."
As previously communicated, Ericsson has made provisions of SEK -3.3 b. in2012which will cover costs related to the implementation of the strategicoption.Once the multimode thin modem business has been fully integrated intoEricssonin Q4 the operation will be reported as a standalone segment. Our currentbestestimate is that it will generate operating losses of approximately SEK 0.5b.in Q4, 2013, primarily related to R&D expenses.
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