Ericsson reveals $1.22 billion hit over joint venture

Ericsson reveals $1.22 billion hit over joint venture

Swedish telecom group Ericsson said on Thursday it would book a charge of eight billion kronor ($1.22 billion or 923 million euros) in the fourth quarter over its misfiring mobile chip venture ST-Ericsson.
The company said it would not become the full owner of the joint venture, after semiconductor maker STMicroelectronics last week announced it would sell its half.
"The charge includes a writedown of assets to reflect the current best estimate of Ericsson's share of the fair market value of the joint venture, as well as additional charges related to the available strategic options for the future of the ST-Ericsson assets," the company said in a statement.
The implementation of those options accounted for around three million kronor of the charge, most of which would be spent next year, it said.
"Ericsson will continue to explore various strategic options for the future of ST-Ericsson assets," the company added.
The mobile chip maker has never turned a profit since being formed in 2009, and has weighed on the bottom line of its struggling Swedish parent company, which in November said it would cut almost 10 percent of its workforce.
In the third quarter, ST-Ericsson made a loss of $190 million.

Nokia Siemens to sell optical networks unit to Marlin Equity Partners

Mobile telecoms equipment maker Nokia Siemens Networks (NSN) said on Monday it is to sell its optical fibre networks unit to Marlin Equity Partners.
NSN didn't give any financial details for the sale but said it would be completed in the first quarter of next year.

As a result of the deal as many as 1,900 employees, mainly in Germany and Portugal, will be transferred to the new company, NSN said in a statement.

Nokia Siemens Networks, which competes with Ericsson , Huawei and Alcatel Lucent , is undertaking a cost-cutting plan, which includes laying off a quarter of its staff and selling product lines to focus on mobile broadband.

The joint venture between Nokia Oyj and Siemens AG has been a drain on profits for owners Nokia and Siemens but it reported record profits in the third quarter, helped by sales of equipment for fourth-generation high-speed LTE networks in Japan and Korea.

The restructuring is expected to result in 1 billion euros of cost savings by the end of next year.

© Thomson Reuters 2012