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STMicroelectronics (STM) To Exit Ericsson JV; Shares Up

 December 10, 2012 10:41 AM

(By Balachander) STMicroelectronics N.V. (NYSE: STM), the European chipmaker, said it has decided to exit its loss-making joint venture (JV) ST-Ericsson.

The company, which disclosed a new strategic plan, said it is in talks on exit options for ST-Ericsson, STM's mobile chip JV with telecommunications company Ericsson.

"Today we are announcing the new ST, aligned with the new market environment," said ST CEO Carlo Bozotti. "Based on that, we have made the decision to exit ST-Ericsson after a transition period."

STM said it will continue to support ST-Ericsson as their supply-chain partner, advanced process-technology partner and application-processor IP provider.

[Related -China Sets A Floor For Growth]

"This disengagement process has started, with the transition expected to end during the third quarter of 2013," STM said in a statement.

The company said its new financial model targets 10 percent or more operating margin.

STM said its new strategy is based on two product-segment organizations: Sense & Power and Automotive Products; and Embedded Processing Solutions.

The company expects both product segments to be profitable and to generate cash.

In addition, STM said it expects to reduce quarterly net operating expenses to an average quarterly rate in the range of $600 million to $650 million by the beginning of 2014.

U.S.-listed shares of STM rose 3.70 percent to trade at $6.72 on the NYSE on Monday.

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