by Anton Shilov
01/21/2013 | 11:58 PM
After STMicroelectronics decided to exit its joint-venture between itself and Ericsson, the management of the mobile system-on-chip developer hired JP Morgan Chase & Co. to investigate further financial options for the company, including potential sale. Since the JV has been losing money for a while, sale or merge is a likely option.
ST-Ericsson, headquartered in Geneva, Switzerland, is a 50/50 joint-venture of Ericsson and STMicroelectronics established on February 3, 2009. The company had revenue of around $1.7 billion in 2011, but has never been really profitable. Moreover, according to STM, ST-Ericsson has never attained a break-even point, which means that chances to make it profitable are fairly low in the current market conditions.
As a result of STM’s decision to exit the joint venture later this year, JP Morgan Chase & Co. has been hired to explore options including a sale of ST-Ericsson, reports the Wall Street Journal, citing sources familiar with the matter. An ST-Ericsson official said the chip designer is working with an external advisor “to ensure the best possible future for ST-Ericsson”, but did not elaborate. The process may not end in a sale, and it is unclear how much the companies are seeking for the joint venture.
ST-Ericsson develops highly-integrated system-on-chips and platforms for mobile devices, which include both multimedia and connectivity capabilities. ST-Ericsson’s NovaThor smartphone platforms support Google Android and Microsoft Windows Phone operating systems.
Considering rather substantial competition on the market of smartphone and mobile phone platforms these days and the fact that even Texas Instruments decided to refocus to embedded applications, it is unlikely that independent investors will be interested in ST-Ericsson. However, certain competing market players may be interested in patents, technologies and talents.