ST-Ericsson Plans Further Cutbacks

Wireless chips and mobile platform specialist ST-Ericsson has announced further cost-cutting plans that will save the company an extra $115 million a year in operating expenses, but which could lead to a headcount reduction of about 600 jobs, around 7.5 percent of the company's workforce.

The cuts will come from an "extensive R&D efficiency program" that will include a "global workforce review" that could affect up to 600 staff globally. No further details were provided.

The company, a rival to Qualcomm Inc. (Nasdaq: QCOM) and Texas Instruments Inc. (NYSE: TXN) formed last February through the combination of Ericsson AB (Nasdaq: ERIC)'s mobile platforms business and the mobile semiconductor business of STMicroelectronics NV (NYSE: STM), has spent most of this year initiating various reorganization plans and swapping out senior executives. (See ST-Ericsson Replaces CEO, Ericsson Joins Mobile Chip Challenger, and ST-Ericsson Is Born.)

In October the company announced, as part of its third-quarter results, that a $250 million cost-cutting program associated with the merger had been "substantially completed" by the end of September, and that a further $230 million restructuring plan, announced in late April and involving a headcount reduction of about 1,200 staff, was ongoing. (See STMicro Reports Q3 and ST-Ericsson Reports 2 Months.)

The company has, though, had some good news to talk about, especially regarding its business in China. (See ST-Ericsson Boasts China Success and China Mobile Picks ST-Ericsson.)

And it should be cheered by the news from one of its main customers, Nokia Corp. (NYSE: NOK), which is expecting the global handset market to grow in 2010 by 10 percent compared with this year. (See Nokia: Device Volumes up 10% in 2010.)

— Ray Le Maistre, International News Editor, Light Reading