comment on this article

Rearranging deckchairs?

Since its formation in 2009 as a joint venture between STMicroelectronics and Ericsson, ST-Ericsson (STE) has been losing money at an alarming rate. Its latest figures, covering the first quarter of 2012, show a net loss of $312million sales of $290m. Attempts to turn things around have failed; in Q1 of 2011, sales were $444m, with a net loss of $178m. The company now has $1billion of debt alongside its sequential losses.

The obligatory reshuffling of management took place earlier in the year and the new ceo has responded by developing a new strategy in which 1000 people will be sacked – including a 'substantial' reduction in senior management positions – and another 700 transferred to parent company STMicroelectronics, which will now undertake application processor development and license this back to STE. STE will now become an integrator and IP developer.
The problem for STE – and for any company which has the misfortune to be in similar straits – is that it can only turn things around by getting ahead of the game; hard enough in any sector, but a big ask in the rapidly moving and price aggressive mobile wireless sector.
Futile tasks are often categorised under the broad heading of 'rearranging the deckchairs on the Titanic' and it's tempting to regard the recent changes at STE as just that. It seems all but inevitable that STE will be 'stripped for parts' at some time in the future.

Author
Graham Pitcher

Comment on this article


This material is protected by Findlay Media copyright See Terms and Conditions. One-off usage is permitted but bulk copying is not. For multiple copies contact the sales team.

Enjoy this story? People who read this article also read...

What you think about this article:


Add your comments

Name
 
Email
 
Comments
 

Your comments/feedback may be edited prior to publishing. Not all entries will be published.
Please view our Terms and Conditions before leaving a comment.

Related Articles

Keep them coming

Low cost development platforms are beginning to exhibit behaviour similar to ...