It wasn’t too long ago that ST was regarded as a ‘hospital case’. In 2012, the company was weighed down by ST-Ericsson, its loss making joint venture, but was also under performing, to put it kindly, in its core business.
It also outlined a ‘strategic plan’ at the time, with rumours suggesting before its announcement that ST would be ‘sold for parts’ – the digital side would go, with the analogue, mixed signal and MEMS operations retained. When the plan was finally unveiled, it appeared there wasn’t a plan, except to get out of ST-Ericsson – which it did in 2013.
Since then, ST has pretty much muddled along. But this year, a financial statement suggested the company might have turned a corner; revenues were up and there was a profit to report. And its share price on the New York Stock Exchange has risen from $8 on this day in 2016 to $20.
Yet mixed messages remain. Operating costs have been slashed, with R&D being one of the main casualties, as the company looks to achieve an operating margin of 10% ‘rapidly’. Financial analyst Bloomberg pointed out that ST would need annual sales of $10bn to hit that target – 25% more than the current level.
So does the apparent fab investment suggest something significant has happened in ST’s boardroom? Current CEO Carlo Bozotti, nearing the end of his tenure, has been blamed for many of ST’s misfortunes. Jean-Marc Chery, named deputy CEO earlier in 2017, is the heir apparent. Could Chery now be calling the shots and, if so, is this the start of a new chapter for ST?