Sony Corp is nearing a deal to buy out Telefon AB LM Ericsson's stake in
their 50:50 smartphone joint venture, the Wall Street Journal reported
on Thursday citing people familiar with the matter.
The joint
venture's two parent companies have regularly discussed the nature of
Sony Ericsson's ownership structure, according to the report. It said
the talks were ongoing and could break apart at anytime.
Ericsson and Sony declined to comment on the reported talks.
"We have a long-term commitment to our joint ventures," said an Ericsson spokesman.
Many
analysts say Japan's Sony needs to assert control over Sony Ericsson if
the venture is to recoup market share in the cut-throat world of
smartphones.
Sony and Ericsson's joint venture, formed in 2001,
thrived after its breakthrough with Walkman music phones and Cybershot
cameraphones, both of which leveraged Sony's brands.
But it lost
out to leaner rivals at the cheaper end of the market, and its share of
total handset sales has dropped to below 3 percent from more than 9
percent at its peak.
"A buyout would make a lot of sense for
Ericsson as I believe their share in the joint venture is worth to them
between zero and minus 1 billion euros ($1.33 billion)," said Bernstein
analyst Pierre Ferragu.
"Whatever price they agree on, it would be a positive for Ericsson," he said.
Shares in Sweden's Ericsson gained further on the report and closed 6 percent higher at 69.20 crowns on Thursday.
A
full takeover of the venture would boost Sony's overall offering, which
includes content, gaming devices, consumer electronics and even tablet
computers, but is still missing its own smartphones.
"The buyout
allows Sony to move development in-house and better integrate other
products like gaming into newer phones," said Steven Nathasingh from
U.S. technology research firm Vaxa Inc.
Last month at the IFA
trade fair in Berlin Sony Ericsson's phones were presented inside the
Sony hall, mixed with Sony's TV sets and new tablets.
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