) have completed the split of their joint venture ST-Ericsson.
Ericsson and STMicroelectronics had announced in Dec 2012 that
they are assessing the future of their joint venture and in Mar
2013 they announced their decision to split, which was considered
to be a strategic solution for the joint venture (JV).
According to the terms of the agreement, effective Aug 2,
2013, Ericsson has taken over the design, development and sales
of the LTE multimode thin modem products, including 2G, 3G and 4G
multimode. STMicroelectronics took over the existing ST-Ericsson
products and related business including certain assemblies and
test facilities. After the spin off, Ericsson will get 1,800
employees and contractors on board, while STMicroelectronics will
have 950 employees.
Ericsson believes that thin modems have a strategic importance
in the wireless industry. By taking over the LTE thin modem
products, Ericsson plans to create an extremely focused "thin
modem only" operation.
Both Ericsson and STMicroelectronics have invested huge amount
to establish industry leading technology and Intellectual
Property. After preliminary customer interaction, Ericsson's
management is confident that thin modems will meet the
requirements of the manufacturers in the fast growing smartphone
and tablet markets.
While for STMicroelectronics, the split signifies a major step
ahead in achieving its new financial model target, thereby
allowing STMicroelectronics to strengthen its capabilities to
fuel future growth in specific key product areas.
Furthermore, with the transfer of competencies from
ST-Ericsson, STMicroelectronics will strengthen its skills in the
areas of application processors, RF, analog and power including
software and complex system integration. Apart from this,
ST-Ericsson joint venture portfolio also included devices that
were a strategic fit for STMicroelectronics' focus on the rapidly
growing segments of the wireless semiconductor market.
Ericsson currently has a Zacks Rank #3 (Hold). Other stocks in
the same industry that are worth considering at the moment are
Juniper Networks, Inc.
). Both carry a Zacks Rank #2 (Buy).
ERICSSON LM ADR (ERIC): Free Stock Analysis
HARRIS CORP (HRS): Free Stock Analysis Report
JUNIPER NETWRKS (JNPR): Free Stock Analysis
STMICROELECTRON (STM): Free Stock Analysis
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