STMicro says may need $500 mln to leave ST-Ericsson
STMicroelectronics could need as much as $500 million to get out of its loss-making joint venture with Ericsson , compounding the chipmaker's problems as it battles stiff competition and weak demand.
The group, which also reported its fifth straight quarterly loss, said on Thursday it was finalizing what to do with ST-Ericsson after announcing in December it would exit the venture.
"STMicro could have funding requirements, including the ongoing operations of ST-Ericsson during the transition period and restructuring costs, in the range of approximately $300 million to $500 million during 2013, taking into account the impact of the strategic options," the company said.
STMicro and Ericsson formed ST-Ericsson in 2008 but the mobile chipmaker has failed to make a profit. It has not won enough new customers to compensate for a major drop in business from Nokia , which has lost out to Apple and Samsung Electronics <005930.KS>.
Analysts have said ST-Ericsson, which has around 5,000 employees, could be shut down entirely, or parts could be sold to competitors such as Intel , Broadcom or Samsung. Ericsson has said it will not buy STMicro's stake.
STMicro chief executive Carlo Bozotti declined to comment on options for the ST-Ericsson exit, nor the potential impact it could have on jobs or factories in Europe.
STMicro, the eighth-biggest global semiconductor maker by sales, posted a fourth-quarter net loss of $428 million, against a loss of $11 million the same quarter a year earlier, due largely to restructuring charges and the drag from ST-Ericsson.
That was the fifth straight quarterly loss for the maker of chips for cars, computers, televisions, and motion sensors for video game consoles. The Franco-Italian group has struggled to keep pace with larger U.S. and Asian rivals in part because of its higher cost base, and was especially affected by the downturn in the auto industry last year.
It also reported quarterly revenue down 1.3 percent to $2.16 billion compared with the year-ago quarter, slightly ahead of expectations. Analysts on average expected fourth-quarter revenue of $2.15 billion, according to Thomson Reuters I/B/E/S.
Bozotti said the group saw an uptick in demand in January but needed more time to make sure the trend was sustainable.
"We think STMicro's traditional major customers reached bottom in 2012 and today there are initial signs of a mild recovery," he said.
STMicro forecast first-quarter revenue would fall 7 percent sequentially, plus or minus 3.5 percentage points. Excluding ST-Ericsson, sales would decline 3 percent.
Natixis analysts said the first-quarter guidance for the group as a whole was "a little disappointing", although noted it implied better than normal seasonal trends.
ST-Ericsson had a fourth-quarter operating loss of $169 million, versus an operating loss of $241 million a year ago.
STMicro shares were down 2.5 percent to 5.98 euros at 0927 GMT. France's blue-chip index was down 0.7 percent.
(Reporting by Noel Randewich in San Francisco and Leila Abboud in Paris; Editing by M.D. Golan and Mark Potter)