By Sam Schechner
PARIS--STMicroelectronics NV (STM, STM.FR, STM.MI), Europe's
largest semiconductor maker by revenue, plans to exit its
loss-making cellphone-chip joint venture, as the company reels from
the shrinking market for cheaper, low-end phones.
The Geneva-based company said Monday that it is currently in
negotiations on "exit options" for its ST-Ericsson joint venture
with Ericsson (ERIC), as part of a broader strategic plan that aims
to refocus STMicroelectronics on products like motion sensors and
chips for cars that it hopes can return the company to
profitability.
"The new ST will be more focused, leaner and better positioned
to deliver value to our customers and our shareholders," said Carlo
Bozotti, STMicro's chief executive, adding that the company is
targeting an operating margin of 10%.
STMicroelectronics said it expects to exit ST-Ericsson after a
transition period that will end in the third quarter of 2013, but
will continue to work with the company, as a supply-chain partner
and an intellectual property provider. The company's parents have
already hired a bank to look at potential buyers, according to a
person involved with the process.
In a separate statement, ST-Ericsson, which began a new round of
steep cost-cutting in the spring, said that it is "putting its
strategy into effect in a consistent and aggressive manner," adding
that it will honor its promises to clients and suppliers.
STMicro, which was formed in the 1987 merger of the French and
Italian state-owned chipmakers, has been struggling for the last
several years, as the shrinking market for low-end cellphones and
the decline of Nokia have dragged heavily on ST-Ericsson, which has
never turned a profit.
STMicro's stock closed Friday at $6.48 in New York trading, up
41% from a low in July, but still down a quarter from late March as
woes at ST-Ericsson have weighed on profit.
Write to Sam Schechner at sam.schechner@wsj.com
(Stacy Meichtry in Rome contributed to this article.)
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