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February 1, 2013

STMicro will write off $500m to exit mobile chip venture

The company's Q4 loss widens

By CBR Staff Writer

Swiss semiconductor firm STMicroelectronics said it will write down about $500m to exit its struggling mobile chip joint venture, which was formed in 2008 with Swedish telecoms equipment manufacturer Ericsson.

The company put an estimate of funding requirements, including the ongoing operations of ST-Ericsson during the transition period and restructuring costs, in the range of about $300m to $500m during 2013.

STMicroelectronics president and CEO Carlo Bozotti said, "In connection with our strategic plan, we decided to exit ST-Ericsson after a transition period and our actions this past quarter, including the further impairment charge, are aligned with moving this decision forward."

"With respect to ST-Ericsson, we are finalizing our decision regarding available strategic options. While we do not underestimate the challenges related to the transition, we are committed to ensure a smooth and timely exit."

STMicroelectronics reported revenue of $2.16bn for the fourth quarter of 2012, compared to $2.19bn it reported for the corresponding quarter in 2011.

For the fourth quarter of 2012, the company posted a net loss of $428m, compared to $11m for the same period last year.

The company said that net loss widened due to a charge of $544m for the impairment of wireless goodwill and other intangible assets following its decision to exit the ST-Ericsson joint venture.

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"In the first quarter, we expect our wholly-owned businesses to deliver a better than seasonal revenue performance, with a sequential decrease of about 3% at the midpoint, despite weak macro-economic conditions," Bozotti said.

"Including Wireless, we expect an overall revenue decrease of about 7% at the midpoint of our guidance as ST-Ericsson anticipates a very significant sequential decrease in net sales."

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