ST-Ericsson sees losses balloon

Boardroom musical chairs to stem flow

By Bill Ray, 23rd July 2009

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ST-Ericsson, now the second largest wireless chip maker, has managed to more than double its quarterly losses compared to last year, bleeding $165m over the last three months.

This is the first full quarterly result from ST-Ericsson - which was formed by STMicroelectronics and Ericsson in February this year to create a business second only to Qualcomm in the wireless chip industry - but the company calculates a pro forma loss of $69m for the same period of 2008.

Those figures are based on net sales bringing in $666m, compared to a calculated $966m last year. The company attributes that decline to destocking by customers, which it reckons is just about done. Also contributing to the loss is an an ongoing "cost synergies" program, which should be completed by the end of the year. In fact, when you take account of "acquisition-related intangibles" and "restructuring charges", the company only lost $213m, so that's OK then.

But at least the company is starting to have a coherent shape, with the work being split into three divisions based on technologies: LTE and HSPA headed up by Magnus Hansson, 3G Multimedia platforms run by Marc Cetto and everything else (2G, EDGE, TD-SCDMA, etc.) falling to Thierry Tingaud. We'd certainly want to be working in Mr. Hansson's team, being as he somehow managed to grab HSPA as well as LTE (most people would consider HSPA as an evolution of 3G, while LTE is in a generation of its own).

But ST-Ericsson has to focus on world markets, many of which are still looking to deploy 3G. The company is expecting great things from China, thanks to a development deal with China Mobile that is expected to see four companies deploying TD-SCDMA handsets, utilising chips from ST-Ericsson, over the next 12 months. ®

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