It has been reported that Sony Corp is in active negotiations to buy out the stake of Ericsson in their mobile phone manufacturing joint venture in attempts to reduce the gap between it and its rivals in the smartphone market. This move could potentially aid Sony in its struggle against Samsung Electronics and Apple where it is struggling badly because of its unsuccessful phones and the content of its website.
Sony offers gaming consoles, tablet computers and other consumer electronics gadgets under its own brand name, whereas its mobile phone handsets are sold under the brand of Sony Ericsson. According to two sources from inside the industry, Telefon AB LM Ericsson and Sony have been in talks for several weeks concerning the future of their joint venture as they must decide whether they want to renew their decade old pact this month itself.
Another source who is knowledgeable of the matter told the media this Friday that Sony is currently discussing the prospects of a buyout of the venture. The source refused to be identified as the talks aren’t public. An analyst named Yoshiharu Izumi stated that the deal can potentially be worth in excess of $1.3 billion, which depends upon the kind of agreement that both the partners reach concerning the future ownership and use of the telecom patents in the name of Ericsson.
He said that up until now, the network services and products from Sony had been separate, and that it will be beneficial for the company to combine them. He also said that it is possible for them to lift their shares if they can effectively manipulate their network and gaming services.
According to a report in the Wall Street Journal this Thursday, both the companies are currently in talks which can break up anytime, citing inside personnel as its sources. Spokespersons from both, Ericsson and Sony, declined to comment on the issue. The Ericsson spokesman said that as the talks haven’t yet been announced publicly by Sony, the company will not comment.
The shareholders of Sony looked to be wary of any deal which could act as an added burden to the finances of the company. The company’s stock declined by 3.3% this Friday. The Sony Ericsson joint venture was formed ten years ago and it achieved a fair amount of success with its innovative Cybershot camera phones and Walkman music phones.
