Sony "to buy out Ericsson" in fresh smartphone onslaught

 

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By Reuters

Posted on 7 Oct 2011 at 08:20

Sony is in talks to buy out Ericsson's stake in their mobile phone joint venture, in a bid to catch up with rivals in the smartphone market.

According to sources, Sony and Ericsson have been talking for weeks about the future of the 50:50 joint venture because the companies must decide this month whether to renew their decade-old pact. One source with direct knowledge of the matter said Sony was discussing a buyout.

The move could help Sony make up lost ground in the battle against Apple and Samsung, where it has been hampered by its disparate offerings of mobile gadgets and online content. Tablets, games devices and other consumer electronics are offered under the Sony brand, while smartphones come under Sony-Ericsson.

If they can leverage their games and other network services I think they can lift their share

The source did not want to identified, but Yoshiharu Izumi, an analyst at JP Morgan in Tokyo, said the deal could be worth upwards of $1.3 billion, depending on what agreement the two reach about the continuing use of Ericsson's telecoms patents.

"Up to now, Sony's products and network services have all been separate. Unifying them would be positive," Izumi said. "If it can leverage its games and other network services I think it can lift its share."

Ericsson and Sony declined to comment on the talks.

The joint venture, formed in 2001, thrived after its breakthroughs with Walkman music phones and Cybershot camera phones, both of which leveraged Sony's brands.

But it lost out to bigger rivals Nokia and Samsung at the cheaper end of the market, and was late to react to Apple's entry into the high-end of the market.

It has refocused its business to make smartphones using Google's Android platform, but has dropped to ninth in global mobile phone rankings, down from fourth only a few years ago.