Swedish telecom equipment major Ericsson said yesterday that the company has decided to take a non-cash charge of approximately 8 billion Swedish kroner ($1.2 billion) related to its unprofitable joint venture with Europe's largest chipmaker STMicroelectornics.
''The charge includes write down of assets to reflect the current best estimate of Ericsson's share of the fair market value of the JV, as well as additional charges related to the available strategic options for the future of the ST-Ericsson assets,'' Ericsson said in a statement.
Ericsson's Q4 earnings will take a direct hit of $1.2 billion as a result of the write down.
The 50:50 JV ST-Ericsson was created in 2009 to transform it into a world leader in developing and delivering a complete portfolio of innovative mobile platforms and cutting-edge wireless semiconductor solutions across the broad spectrum of mobile technologies.
It was expected that the Geneva-based company, with a workforce of nearly 5,100, would become a leading supplier to the top handset manufacturers such as Samsung, LG Electronics, Nokia, Sony Ericsson etc.
However, the JV never churned out a profit and its accumulated losses since its inception stand at around $2.7 billion.