Ericsson announced it will take a one-time charge of SEK 8 billion in the fourth quarter on its stake in ST-Ericsson. The non-cash charge will reduce net profit by a similar amount and includes a write down of the value of the ST-Ericsson assets and cash to prepare the company for the future.
The move follows STMicroelectronics' announcement that it plans to exit the joint venture. Ericsson said it does not plan to acquire the majority of ST-Ericsson, but expects it will need to contribute another SEK 3 billion in funding to the venture next year to see out its strategy.
The company said it still believes that the modem technology, which it originally contributed to the JV, has a strategic value for the wireless industry. A key priority is the market introduction of new LTE modems by ST-Ericsson, which Ericsson said it "is certain will be very competitive and needed in the market".
Ericsson said it will continue to look at strategic options for ST-Ericsson and provide more details on the financial effects at its Q4 report.
