Ericsson and STMicroelectronics agree on strategic way forward for ST- Ericsson

Mon Mar 18, 2013 3:14am EDT

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  STOCKHOLM, SWEDEN, Mar 18 (Marketwire) -- 
Ericsson (NASDAQ: ERIC) and STMicroelectronics (NYSE: STM) today
announced an agreement on the way forward for the joint venture (JV)
ST-Ericsson. As communicated by the parent companies in December 2012,
both have been working together toward a strategic solution for the JV.
After months of intensive joint work, the parent companies have selected
the strategic option which maximizes their respective future prospects
and growth plans.

    The main steps agreed upon to split up the JV are the following:

     * Ericsson will take on the design, development and sales of the LTE
multimode  thin modem products, including 2G, 3G and 4G multimode

     * ST will take on the existing ST-Ericsson products, other than LTE
multimode  thin modems, and related business as well as certain assembly
and test  facilities

     * Starting the close down of the remaining parts of ST-Ericsson

    The formal transfer of the relevant parts of ST-Ericsson to the parent
companies is expected to be completed during the third quarter of 2013,
subject to regulatory approvals.

    After the split up it is proposed that Ericsson will assume approximately
1,800 employees and contractors, with the largest concentrations in
Sweden, Germany, India and China.

    It is also proposed that ST will assume approximately 950 employees,
primarily in France and in Italy, to support ongoing business and new
products development within ST.

    Today, it is also announced that Carlo Ferro is appointed President and
Chief Executive Officer of ST-Ericsson, effective April 1, 2013. Ferro is
currently Chief Operating Officer of ST-Ericsson and succeeds Didier
Lamouche who, as previously announced, will pursue opportunities outside
the company. Ferro will lead the work in securing both business
continuity of ST-Ericsson and effective completion of the transition
phase.

    Hans Vestberg, President and CEO, Ericsson and Chairman of the Board of
Directors, ST-Ericsson said: "I welcome Carlo Ferro as the new President
and CEO of ST-Ericsson. Carlo has over twenty years of experience in the
semiconductor industry and a strong track record in driving and managing
complex transformation projects. He has been a contributor to the solid
progress ST-Ericsson has made the past year in terms of strategy
execution and significantly lowering the breakeven point."

    "Ericsson continues to believe that the thin modems hold a strategic value
to the wireless industry. With this move Ericsson will create a highly
focused "thin modem only" operation - an area in which both parents have
invested significant amounts to establish industry leading technology and
Intellectual Property," said Hans Vestberg. "Initial customer contacts
give support to the belief that our modems will meet the requirements of
the manufacturers in the rapidly growing smartphone and tablet market."

    As previously communicated, Ericsson has made provisions of SEK -3.3 b. in
2012 which will cover costs related to the implementation of the strategic
option. Once the multimode thin modem business has been fully integrated
into Ericsson in Q4 the operation will be reported as a standalone
segment. Our current best estimate is that it will generate operating
losses of approximately SEK 0.5 b. in Q4, 2013, primarily related to R&D
expenses.

    The thin modem technology developed within ST-Ericsson has evolved into a
unique architecture for low power, highly integrated multimode multi-band
modems covering GSM/GPRS/EDGE, TD-SCDMA, HSPA+, LTE (TDD/FDD),
LTE-Advanced, the widest array of frequency bands and a feature set that
includes Single RF Chip Carrier Aggregation, VoLTE and IMS.

    An LTE/HSPA+/3G/2G modem based on this evolved architecture was recently
demonstrated at Mobile World Congress in Barcelona and has received its
first global operator certification.


 
 CONFERENCE CALL FOR ANALYSTS,
INVESTORS AND MEDIA

    The conference call for financial analysts, investors and media will begin
at 14:00 CET (13:00 UK time, 09:00 Eastern Daylight Time in the US, and
22:00 local time in Japan). CFO Jan Frykhammar and Chief Strategist
Douglas Gilstrap, will comment on the announcement and take questions.

    Sweden: +46 8 505 202 70 (toll free Sweden: 0200-125 785)

    International/UK: +44 208 817 93 01 (UK free phone 0800 634 5205)

    US: +1 718 354 12 26

    Confirmation number: 10287746

    (Participants will have to enter the confirmation number when dialing into
the conference.)

    Please call in at least 15 minutes before the conference call begins. As
there are usually a large number of callers, it may take some time before
you are connected.

    A live audio webcast of the conference call will be available at

    www.ericsson.com/investors and www.ericsson.com/press.


 
 NOTES TO
EDITORS

    Download high-resolution photos and broadcast-quality video at

    www.ericsson.com/press

    Ericsson is a world-leading provider of communications technology and
services. We are enabling the Networked Society with efficient real-time
solutions that allow us all to study, work and live our lives more
freely, in sustainable societies around the world.

    Our offering comprises services, software and infrastructure within
Information and Communications Technology for telecom operators and other
industries. Today 40 percent of the world's mobile traffic goes through
Ericsson networks and we support customers' networks servicing more than
2.5 billion subscriptions.

    We are more than 110,000 people working with customers in more than 180
countries. Founded in 1876, Ericsson is headquartered in Stockholm,
Sweden. In 2012 the company's net sales were SEK 227.8 billion (USD 33.8
billion). Ericsson is listed on NASDAQ OMX, Stockholm and NASDAQ, New
York stock exchanges.

    www.ericsson.com

    www.ericsson.com/news

    www.twitter.com/ericssonpress

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originality of the information contained therein.

    Source: Ericsson via Thomson Reuters ONE

    [HUG#1685852]

FOR FURTHER INFORMATION, PLEASE CONTACT
Ericsson Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com

Ericsson Investor Relations
Phone: +46 10 719 00 00
E-mail: investor.relations@ericsson.com

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