ST isn't ready yet to break into two separate companies, but it can't continue with business as usual. Start with getting rid of ST-Ericsson.
That's where the advantages of ST's multi-product offerings end and the challenges begin. If your sales are seesawing the way ST's have been, then there's a fundamental problem with the corporate structure and it's time the company's management finally acknowledge this and take steps to correct whatever ails the enterprise. Analysts predict ST's 2012 revenue will be approximately $8.44 billion, down more than 12 percent from the $9.63 billion it reported in 2011 when sales fell 6 percent from $10.3 billion. Current projections for 2013 aren't that impressive, either, with estimates ranging from as high as $9.75 billion (unrealistic) to as low as $8.7 billion (possible).
The swings in sales performance and margin-related pressures resulted in Standard & Poor's Ratings Agency putting ST on negative watch in August. ST, the research firm said, "is likely to report significantly lower revenues, operating margins, and free cash flows in 2012 than we previously expected, following a weakening of operating results that started in the second half of 2011."
Nothing that has happened since August has dramatically and positively changed ST's profile. The company's digital semiconductor business remains fragile due to problems at Nokia and persistent weak demand in Europe as a result of the region's economic challenges. While ST's analog, MEMs, microcontroller and discrete business have performed satisfactorily, this hasn't been sufficient to stem the losses. ST will likely end 2012 with negative operating margin (estimated by S&P's at about 9 percent) and a net loss for the entire year.
So what should ST be doing to spark growth? The idea of breaking the company into analog and digital businesses is tempting but it will only accelerate the ruin of the weaker digital business. However, ST cannot maintain its structural integrity without making some hard decisions about which markets it continue to compete in. I will address the question above in another report. For now, I believe it's time for ST to say goodbye to ST-Ericsson. Holding on to the business makes no sense notwithstanding the huge investments ST and Ericsson have put in it. The business should go on the block.
ST then might see clearly to address its second major problem: the convoluted ownership structure that puts the French and Italian governments in key positions to call the shots about its future.
Bojaji Ojo is editor in chief of EBN, an EE Times sister site.
What good is a phone without cellular connectivity? ST-E can provide the WLAN solution but its not always that it can provide cellular connectivity. Lets leave it at that as I am not in a position to elaborate.
Renesas Mobile never existed before Nokia sold its modem division. That should be a clear indication that RM is what former Nokia modem was. The Mitsubishi, Hitachi and NEC alliance was doing mobile multimedia and nothing to do with cellular modems and was later merged with RM. Nokia modem was the first in getting many technologies deployed in handsets.
I tend to agree with the sentiment that offering a me too strategy is not going to lead to growth. But then I look at what Samsung has done relative to Apple. Samsung in many ways has been a successful me too relative to Apple. And the other players are all jealous of both Apple and Samsung.
The Arm players are doing well and Intel is somewhat on the defensive end these days since the PC market is not growing much these days. Most of the Arm players are not doomed.
ST has failed in its wireless business because it is insular and too cautious. Most of ST's American offices are already shutdown or going that way. Bozotti is just a empty suit compared to his predecessor with no vision and most of ST management is like that these days. The governments of Italy and France probably don't have the money to bailout ST. ST will only get broken up when it faces bankruptcy. So I think ST will still exist, but I don't see ST as particularly innovative any more. ST has always focused on the process and not on the end product. So its successes have been more by accident rather than by good management.
As far as connectivity is concerned, WLAN is the cheapest wireless connection right now, NOT the cellular modem. If you take a large picture view of connectivity, you should see that cellular modem without WLAN is half-baked. Mobile Phone is only a subset of the universe of Connected Devices.
ST-E has,over the years, absorbed EMP (Ericsson Mobile Platform), Philips Semiconductor's cellular modem group. Further, STM was a reasonably contender for cellular modem ICs before ST-E was formed. There were trade articles claiming that STM also absorbed some modem related groups from Nokia.
In contrast, Renesas Mobile's core was the former cellular modem groups from Mitsubishi, NEC, Hitachi Semiconductors (more dominated by Mitsubishi). It acquired the over-1000 people team from Nokia when it became a financial and operational burden for Nokia. Considering the contribution of Japanese semiconductors in cellular modems since GPRS and CDMA2000, it is only logical to rate ST-E way above Renesas Mobile. "Laughing Stock" refers to the fact that Renesas Mobile is loosing good money due to bad management since it was formed.
Most of the ARM Players are doomed. Look at TI, Freescale, Marvell. ST is not a different story either. When things become commodity, companies involved lose big time. They are all peddling commodity products with MeToo features. They will all get burnt
I think throwing away some business units that are competitive anymore should be very natural for large companies like STM. I think keeping the MCU , MEMS and analog segments are good but STM really should think about other digital functionalities.
STM32f4 discovery is the best arm processor available in the world produced by St; But there is insufficient support on all over product portfolia of ST. if you have not a beginner side of view you generally loss...
January 2016 Cartoon Caption ContestBob's punishment for missing his deadline was to be tied to his chair tantalizingly close to a disconnected cable, with one hand superglued to his desk and another to his chin, while the pages from his wall calendar were slowly torn away.122 comments