Rumor: Sony to buy out Ericsson from phone joint venture

By on October 6, 2011, 6:00 PM

Sony is reportedly nearing a deal to buy out Ericsson's stake in their mobile-phone joint venture. According to the Wall Street Journal, the Japanese firm may pay up to $1.7 billion (1.25bn euros) to gain full control of the London-based entity and venture into the mobile phone market on its own as it tries to catch up to Apple, HTC, Samsung and others.

Sony's management sees the consumer-focused smartphone business as an essential part of a strategy to extend their online network of music, videos and games. Ericsson on the other hand has more of a business-to-business focus and no longer sees selling handsets as key to entice mobile phone operators to buy its telecommunications equipment.

The combined their cellphone operations in 2001 into a 50/50 joint venture. Sony Ericsson struck gold several years ago with Walkman-branded phones but the venture was slow to catch the smartphone boom. In 2008 and 2009, the company posted two consecutive years of net losses, downsized, and returned to profitability in all fiscal 2010 and the first quarter of fiscal 2011. The company slipped back into the red the next quarter.

Curiously, the paper claims that Sony Ericsson for years wanted to offer a phone featuring Sony's PlayStation videogame brand, but Sony executives didn't want to give up control of one of their leading brands and share half of the potential profit. They finally started selling a more serious gaming smartphone this year with the PlayStation-certified Xperia Play, but by then advanced videogames had already become a regular feature in competing smartphones.

The negotiations between the two companies are still ongoing and could fall apart at any time, the WSJ said.




User Comments: 3

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Guest said:

Ericsson is a very strong brand. This would be a bad decision. After all without Ericsson, Sony Ericsson wouldn't be what it is now. Lets not forget that Ericsson was a leader in the market when the joint-venture was made. Sony was just a insignificant player at that time.

Butch said:

Guest said:

Ericsson is a very strong brand. This would be a bad decision. After all without Ericsson, Sony Ericsson wouldn't be what it is now. Lets not forget that Ericsson was a leader in the market when the joint-venture was made. Sony was just a insignificant player at that time.

Agreed. This is bad for consumers all the way around.

Chris Cornell Chris Cornell said:

Ericsson is one of the world's leaders when it comes to mobile network development. If Sony buys out Ericsson I'm done buying their products. I have a Sony Ericsson Android phone at the moment and I love it - but it could be my last if this happens.

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