ST-Ericsson to close Basingstoke site with loss of 139 jobs

According to the Basingstoke Gazette, ST-Ericsson is to close its R&D centre on the Chineham industrial estate, outside Basingstoke with the loss of 139 jobs.

The company’s other UK sites, in Bristol and Daventry, will not suffer cutbacks.

Last week ST-Ericsson announced a fourth cost-cutting round which may reduce employment by 500 people to save $120m a year in costs by the end of 2012.

The company blamed  flagging sales of  ‘legacy’ products, i.e. obsolescent products, for the latest re-structuring round, with CEO Gilles Delfassy saying the action “Will not compromise the execution of our new products and we remain steadfastly committed to leadership in the smartphone and tablet markets."

Closing an R&D centre appears to be incompatible with that aspiration.

This is the fourth cost-cutting plan since the company was put together in 2008 by combining the wireless businesses of Ericsson, STMicroelectronics and NXP.

In November 2008, the company cut operating expenses by $250m in an initial round of restructuring.

Then, in April 2009, the company said it would cut 1,200 jobs expected to save $230m in costs. Later that year a further 600 jobs could be cut with the aim of saving a further $115m.

ST-Ericsson’s Q1 2011 sales were $444m down on Q4 2010 sales of $577m and on Q1 2010 sales of $606m. The Q1 2011 loss was $149m compared to the Q4 2010 loss of $119m and the Q1 2010 loss of $114m

The target for the company to break-even is being regularly pushed out. The target date is now Q2 2012.

ST-Ericsson's worsening results are now significantly impacting the profitability of parent company STMicroelectronics. When ST announced its Q1 2011 results, CEO Carlo Bozotti said: "Revenue results were below the midpoint of our sequential guidance due to wireless legacy sales falling off at a faster rate than anticipated at ST-Ericsson and weak demand at a single customer."